Oral Answers to Questions

FOREIGN AND COMMONWEALTH OFFICE

The Secretary of State was asked—

Turkey

Derek Wyatt: What assessment he has made of the recent presidential elections and other political developments in Turkey.

David Miliband: Turkey's recent parliamentary and presidential elections have delivered a strong popular mandate to the AK party to continue with a programme of reform and economic development in that country. That has sent out a strong signal about Turkey's commitment to democracy both in Turkey and elsewhere in the Muslim world. When I went to Turkey on 5 September I made it clear that the UK remains committed to supporting Turkey's modernisation and its EU accession. I am confident that the new Turkish Government will be positive partners for the UK and the EU.

Derek Wyatt: What are we doing on the soft power front? Is the British Council being upgraded, and will we do more school twinning and that sort of thing?

David Miliband: I am happy to confirm that the British Council is active in Ankara and across Turkey; when I was there, I participated in a seminar that it organised. I think that the school twinning is now supported by the Department for Children, Schools and Families, which has a special website for international twinning operations. The increasing engagement of Turkish business with business across the EU and indeed globally is a positive sign. I might add in parentheses that Turkey's commitment to helping to support the development of a stable and peaceful Iraq is also an important indication of the way in which Turkey wants to fulfil its international responsibilities.

Peter Tapsell: Will the Secretary of State bear in mind that one of the many reasons for not invading southern Iraq was that it was likely to precipitate a Turkish invasion of the Kurdish north? As that may be imminent, are we strongly advising Turkey not to do it?

David Miliband: I find that a peculiar question, given that we have just been through a referendum— [Laughter.] That is the next question. We have just been through an election campaign in Turkey— [Interruption.] I do not want hon. Members to use their best lines before a later question. We have just been through an election campaign in Turkey, in which PKK terrorism was a serious threat to southern Turkey, and the governing party's restraint in refusing to undertake the sort of activities to which the hon. Member for Louth and Horncastle (Sir Peter Tapsell) referred was a marked feature of that campaign. Although he talks about the imminence of some sort of Turkish invasion of northern Iraq, it would be better to commend the Turkish Government on their restraint and say that we want to work with them, and that we want the Iraqi Government to work with them and to make sure that we crack down on that dangerous terrorism in northern Iraq.

David Lepper: Does the Secretary of State share the concern felt by many people in the Republic of Cyprus about the fact that the new Turkish Government have still not kept to their undertaking that once they had secured the opening of EU accession negotiations, they would lift their embargo on ships from Cyprus entering Turkish ports?

David Miliband: Obviously, I discussed relations with Cyprus when I was in Turkey. The fairest thing to say is that there are responsibilities on both sides. My hon. Friend rightly refers to the embargo, but it is important that we emphasise that there are responsibilities on both sides. The 8 July UN process that has now been started needs to be followed through, with responsibilities on both the Turkish and Cypriot sides.

Patrick Mercer: The Secretary of State will be aware that on the sixth anniversary of the 11 September bombing, a large bomb was intercepted in Ankara. It is likely that it was to be detonated with a device in Germany. Has he any comment to make on the political implications of that for Turkey?

David Miliband: When I was in Turkey I talked with the Turkish Government about the terrorism that they face; we all know about the Istanbul bombing, which claimed many lives. The political implications are twofold. First, we need enhanced security co-operation, including with the Turks, and that is taking place. Secondly, we need to send out a very strong message that those who would seek to plant bombs anywhere in Europe will affect people of all religions and none, and that is why it is in all our interests to make sure that we work together against them.

Iran

Richard Ottaway: What steps he is taking to promote investment in Iran.

Kim Howells: The Government do not promote investment in Iran. UK Trade and Investment's advice to business makes it clear that potential investors should be aware of the implications of existing and future sanctions before investing in Iran. Any company or individual considering investment in Iran should contact officials in UKTI, who will be able to inform them of the legal constraints and considerable commercial and political risks that they would face.

Richard Ottaway: I am sorry to tell the Minister that that is a very misleading answer. The UK Trade and Investment website says:
	"Iran has the potential for significant growth...How can we help you?"
	Is the Minister aware that Iran is exporting terror, threatening to wipe Israel off the map, manufacturing nuclear weapons and manufacturing bombs to kill our troops? He is using taxpayers' money to support the economy that has paid for that. Does he accept that that is nothing short of a policy of appeasement, and will he stop it?

Kim Howells: No, I do not accept any of that.

Michael Fabricant: Unplug the website.

Kim Howells: Unusually, the hon. Gentleman gives good advice from a sedentary position. There is a sentence that needs to be changed, and I have spoken to the chief executive of UKTI about that. However, many British and European companies in Iran are trading within the law imposed by sanctions. UKTI gives them advice and tries to help them to ensure that they do not encroach beyond the law, which is an important function. I quite agree, however, that the regime in Tehran is obnoxious, and we must do everything that we can to put pressure on it to ensure that it changes those policies.

Barry Sheerman: I agree with my hon. Friend that it is not a very nice regime in Iran, but is it not time that we started new initiatives and a new dialogue with Iran? Is it not about time that we distanced ourselves from the United States and showed Iran that we want to talk to it? Is that not the way to persuade it to change its ways?

Kim Howells: We have always maintained diplomatic relations with Iran, unlike the United States. My right hon. Friend the Foreign Secretary has met the Iranian Foreign Minister, and we have had many discussions with the Iranians. The E3 plus 3 has made offers to Iran which, by any definition, are very generous and sensible. We have offered, for example, to help them with a civil nuclear programme, but they have rejected those offers. They have constantly played for time, and they are developing—as far as I believe on the intelligence that we have been given—a nuclear bomb programme. They have enriched uranium with that in view, which is something that we cannot ignore—it is extremely important. In my view, it is one of the most serious difficulties that the world faces at the moment, because if the Iranians develop a nuclear bomb, there will be proliferation across the world, as others will want to develop nuclear bombs.

David Lidington: How does the Minister explain recent reports that the British Government are resisting pressure from France and the United States to accelerate further EU sanctions against Iran? Given his very strong criticism of the Iranian regime, will he commit the Government today to press urgently for action to deny Iranian banks access to European financial systems and to impose restrictions on European investment in Iranian gas and oilfields?

Kim Howells: Yes, I can give the hon. Gentleman those assurances and tell him that my right hon. Friend the Foreign Secretary will argue at the appropriate EU meetings next week that we should tighten sanctions across Europe against the Iranian regime. I am very confident that that is exactly what we will do.

EU Reform Treaty

Andrew Rosindell: What his policy is on holding a referendum on the new European constitutional treaty.

Philip Hollobone: What Government policy is on a national referendum on the new treaty reforming the constitutional arrangements of the European Union; and if he will make a statement.

David Miliband: The mandate for the reform treaty agreed by all 27 Heads of Government makes it clear that the constitutional concept has been abandoned. The reform treaty reforms the EU institutions just as previous amending treaties have done. In line with these precedents, ratification should be a matter for Parliament.

Andrew Rosindell: Given that today's European Scrutiny Committee report describes the new treaty as "substantially equivalent" to the EU constitution, does the Foreign Secretary not accept that the British people should have a right to vote on that in a referendum? Does he not remember that that was his pledge at the last election?

David Miliband: I am sorry, but I think that the hon. Gentleman must have listened to the "Today" programme rather than read the document from the important Committee. Let me read to him exactly what it says. It says that the reform treaty is "substantially equivalent" to the constitutional treaty
	"for those countries which have not requested derogations or opt outs from the full range of agreements in the Treaty".

Mark Francois: Read page 16.

David Miliband: Whatever the shadow Minister shouts out, that is in the section of the Committee's report labelled, "Conclusion"—which, I think, is rather important in this respect. The framework referred to earlier does not supersede the conclusion of the report, and I suggest he reads it more carefully.

Philip Hollobone: I, too, have been reading the European Scrutiny Committee's report, from which I quote, for the benefit of the Foreign Secretary. It states that
	"references to abandoning a 'constitutional concept'"
	are
	"likely to be misleading in so far as they might suggest the Reform Treaty is of lesser significance than the Constitutional Treaty",
	so will the Foreign Secretary ensure that he and his junior Ministers abandon that bogus argument, which has fallen apart under detailed examination?

David Miliband: We know the hon. Gentleman's position. He says that leaving the EU would be a positive step. I suggest that he reads the legal draft that came out on Friday, which was put in the Library and given to the Clerks of the Committees of the House. It makes absolutely clear the direction in which Europe is moving, which is to respect the red lines that the United Kingdom has asked for. I commend to him the words of the chairman of his own party's democracy taskforce, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who said that if Parliament cannot decide this sort of thing, Parliament is worthless. Parliament should not be worthless.

Chris Bryant: The treaty makes it clear that if it goes through, Britain will increase the number of votes that it has in the Council. In other words, it will increase our power to make decisions in Europe. It also makes sure that the French, who for years have been trying to prevent the liberalisation of their energy policy, to the detriment of British consumers, will have to comply with European policy. Would it not make sense for us to ratify the treaty as fast as possible, in the interests of the British?

David Miliband: My hon. Friend makes important points. I, for one, look forward to the treaty coming before the House and being debated at great length, so that the myths that have been propagated can be properly debunked.

Patricia Hewitt: Does my right hon. Friend agree that the new treaty gives the European Union the opportunity to put behind us procedural arguments about the changes required for enlargement, and instead gives us the opportunity to concentrate on the really urgent challenges that we face, notably climate change?

David Miliband: My right hon. Friend makes an important point. If she has read, as I have, the report of the Dutch council of state, which is the only independent legal body to have looked at the treaty, she will know that it considers that
	"these changes are aimed, as far as possible, at purging the Constitutional Treaty of those elements which could have formed starting points for a development of the EU in a more explicitly centralised or federal direction".
	In other words, it does indeed lay the basis for us to ensure that the EU gets on with its proper business, which is about climate change, jobs, crime and immigration.

William Cash: As a member of the Select Committee that produced the report, I condemn the remarks made by the Foreign Secretary. He is coming to see us on 16 October and he will not have quite such an easy ride in front of the Committee as he may try and get away with on the Floor of the House. The document is substantially equivalent to the treaty and requires a referendum. The Foreign Secretary said the other day that we are a parliamentary democracy and that we therefore make such decisions in Parliament. The Referendum Act 1975 was passed by Harold Wilson and a Labour Government. It specifically returned, as it should, the right of the British people, through their representatives, to make a decision by referendum to enable the people of this country on an impartial question to come to a decision about a matter of massive importance to their future—

Mr. Speaker: Order.

David Miliband: The fairest thing to say for the hon. Member for Stone (Mr. Cash) is that he has been consistent on the issue. When the Maastricht treaty came before the House, dozens of Back Benchers who are still in the House, and Front Benchers, voted against a referendum. He voted in favour of a referendum. I look forward to talking with him and his Committee next week. He cannot deny that the quotes that I have given from his report are accurate.

David Drew: Although some of us on this side of the House will take no lessons about referendums from the Conservative party because of its failure to hold one on the single market and on Maastricht, we still feel that this is a manifesto commitment. If anything, a referendum gives significant authority to the Foreign Secretary when he goes to talk about the red lines in respect of ensuring that at least those red lines are kept and that we seek further improvements. Will he stick to his guns and go for a referendum?

David Miliband: I will certainly stick to my guns, but that involves saying that the decision should be taken in this House. My hon. Friend is right to say that we still have a couple of months before the treaty is finally signed in December. We shall work right up until that final agreement to ensure that the red lines are properly respected. The Prime Minister said that yesterday and I am determined to repeat it today. I look forward to taking on the discussion with my hon. Friend, because it will become clear that Europe and the Heads of Government have rejected a centralised or federalist future. We have the opportunity to make the European Union work for people and I think that that is what unites the two of us.

William Hague: On the question of the treaty being substantially equivalent to the constitution, should not the Foreign Secretary have read on to paragraph 45 of the Committee report? It states:
	"Even with the 'opt-in' provisions on police and judicial cooperation...and the Protocol on the Charter, we are not convinced that the same conclusion does not apply to the position of the UK".
	Given that the report says that his central argument on the treaty's constitutional characteristics is not helpful and is even likely to be misleading, should he not now drop this specious line of argument? Is he not simply padding along in the footsteps of the Prime Minister at the weekend and trying to treat the people of this country like fools?

David Miliband: The Committee's report was written and printed before the legal text was published on Friday. I am happy to go through the detailed arguments about justice and home affairs, and other issues raised by the Committee with it—I shall do so next week—because I think that if one examined the treaty, one would see that the red lines are being respected.

William Hague: No one believes the Foreign Secretary any more when he argues that this is not the EU constitution. When the Prime Minister met the Irish Prime Minister on 17 July, even he referred to it as the European constitution. Do we not now have an extraordinary double of a Government who are too scared to hold a general election that they had planned and too scared to hold a referendum that they had solemnly promised the people of this country? Is it not time that the Foreign Secretary summoned up the courage that his predecessor but one showed to the previous Prime Minister and told the Prime Minister that he needed a democratic mandate for such a far-reaching treaty, rather than colluded in this cynical betrayal of the promises made to the country?

David Miliband: I am very pleased that the right hon. Gentleman has mentioned predecessors, because he has recently recruited Lady Thatcher back to his campaign team. I suggest that he listens to what she said:
	"Perhaps the late Lord Attlee was right when he said that the referendum was a device of dictators and demagogues."
	The right hon. Gentleman will never be a dictator; how does it feel to be a demagogue?

Ian Lucas: In my reply to the three constituents who have written to me about this matter, I made it clear that it is the historic role of this Parliament to scrutinise and consider in detail treaties with other nations. Does my right hon. Friend agree that it would be a profound abrogation of responsibility on the part of this House to set that detailed scrutiny aside in favour of a ludicrous tick-box referendum?

David Miliband: My hon. Friend makes an important point. I do not wish to damn his or my political career by saying that we agree with the chairman of the Conservative democracy taskforce but it is the role of this Parliament to undertake that work. I point out to Conservative Members that every previous amending treaty, Labour or Tory, has been presented to and passed by Parliament. That is our job and we should get on with it.

Michael Moore: At the centre of this debate is the status of the charter of fundamental rights. The timely and useful report from the European Scrutiny Committee raises a number of issues about it. In particular, it highlights the potential imbalance between the general obligation on the Court of Justice to ensure the uniform application of union law and the protocol secured by the Government, which seeks to ensure that the charter does not extend the ability of the court to find that UK law is inconsistent with the charter. On reflection, does the Foreign Secretary believe that the current text is robust enough? Will he ensure that we get a stronger set of words before the final treaty is developed?

David Miliband: The hon. Gentleman approached this issue in a serious way and he deserves a serious answer to his question. [Hon. Members: "A boring approach."] Conservative Members describe a serious approach as being boring; that says a lot about the modern Tory party.
	The hon. Gentleman raises an important point about article 1 of the protocol, and it is significant to consider it because the protocol is legally binding. It says:
	"The Charter does not extend the ability of the Court of Justice, or any court or tribunal...to find that the laws, regulations or administrative provisions, practices or action...are inconsistent with the fundamental rights, freedoms and principles that it reaffirms."
	In other words, it is for these islands, and for this Parliament, to set their own laws in respect of the issues covered by the charter. We shall certainly see that through in our negotiations.

Doug Henderson: Recognising that any change to a European treaty is, in effect, a constitutional change, does my right hon. Friend agree that deciding how to deal with such a change is a matter of balance and, perhaps more importantly, workability? I urge him to stand firm and act against some of the hypocrisy we have heard this afternoon from colleagues who argued that there was no need for a referendum on the Maastricht treaty, which retained far more power for the European Union than the current treaty. I urge my right hon. Friend to stand firm.

David Miliband: My hon. Friend will be amused to know that a number of the Opposition Members chuntering away during his question were actually there in 1992, voting against a referendum. One of the things we shall be able to do as the debate proceeds is to ask them how they could be against a referendum in 1992 and in favour of one in 2007. I am sure that my hon. Friend, as a former Minister for Europe, will ensure that his historical experience is brought to bear on this debate.

Zimbabwe

James Duddridge: If he will make a statement on the political situation in Zimbabwe.

Meg Munn: The situation in Zimbabwe gives grave cause for concern. That is why the Prime Minister has stated he will not attend the EU-Africa Summit if President Mugabe is present. It is also why we are working for change by maintaining international pressure on the regime; supporting those working in Zimbabwe working for democratic change; and giving up to £40 million in humanitarian aid every year.

James Duddridge: In 2003, the Select Committee on Foreign Affairs suggested revoking Robert Mugabe's knighthood. In July this year, Lord Malloch-Brown said in a letter to me that his Department will continue to keep the issue under close review. When will the Foreign Office stop dithering and take some action on this issue?

Meg Munn: I understand the cause of those who wish to see the knighthood removed, and as my noble Friend said, we are currently reviewing the matter. However, let us clear about this: the situation in Zimbabwe demands a great deal more than that, and removing President Mugabe's knighthood might detract from that focus and give him more publicity. We need to concentrate on the real problems faced by the people of Zimbabwe.

Kate Hoey: Following on from the Prime Minister's welcome statement that neither he nor any of his senior Ministers will attend any summit between the European Union and the African Union, and the agreement of the Foreign Office last week not to allow Peter Chingoka, the chairman of the Zimbabwe Cricket Union, into this country, would the Foreign Office consider taking up the suggestion of Lord Morris, the former Transport and General Workers Union general secretary, that we consider co-ordinating with Australia a wider sporting boycott on Zimbabwe?

Meg Munn: We are happy to hold discussions about that. There are currently no formal agreements about sporting sanctions but we have made our position clear and are happy to discuss those matters.

Andrew MacKay: It must be right for the Prime Minister to follow our advice and say that he will not attend the EU-Africa summit if Mugabe is there. Will the Under-Secretary confirm that if any of Mugabe's senior henchmen are there, the Prime Minister will not attend? Otherwise, we will send a bad message to Zimbabwe.

Meg Munn: We have always said that Zimbabwe should be represented because it is important that the issues that affect it and the whole of Africa are discussed. We will have to consider specific personnel at the time.

Eric Illsley: My hon. Friend knows that the German Chancellor has repeated the Portuguese Government's mistake of suggesting that Robert Mugabe should attend the EU-Africa summit later this year. Will she make representations to not only our German colleagues but other EU countries to try to ensure that the embargo on Robert Mugabe is maintained?

Meg Munn: I assure my hon. Friend that we are in discussion with our EU partners on the matter. Chancellor Merkel was clear that all African countries should be invited to the summit, and we agree. However, we have always said that Zimbabwe should be represented, but not by President Mugabe.

Keith Simpson: We welcome the Prime Minister's statement and I am glad that we have moved on from our debate in July, when the Under-Secretary was unable to give us the guarantee that the Prime Minister would not go to the EU-Africa conference. Following the comments of the hon. Member for Barnsley, Central (Mr. Illsley) about Chancellor Merkel, do the Government believe that we need to generate additional EU sanctions against Zimbabwe? In particular, does she believe that the EU could go much further and home in on some of the more obnoxious members of the Zimbabwean regime, such as Reserve Bank governor Gideon Gono, who is a leading friend of President Mugabe and helps finance the regime? Does she agree that it is disgraceful that he can still travel abroad and that we cannot impose sanctions on him?

Meg Munn: It is important to examine sanctions carefully. European Union targeted measures are there precisely to ensure that they do not further hurt ordinary Zimbabweans. On the specific issues that the hon. Gentleman raises, we have already argued for Gideon Gono to be added to the EU list. We will continue to do that, and the Home Secretary has excluded him from the United Kingdom.

Lindsay Hoyle: Discussions are fine but action is needed. The sooner action is taken, the better. The whole country has been razed to the ground. I have met groups from Bulawayo and they cannot accept that everyone seems simply to be talking. They need action now. I urge the Government not to wait any longer, please.

Meg Munn: I agree with my hon. Friend, but the situation ultimately needs an African solution. Since July, when we had our debate here, the UK has committed a further £8 million to the World Food Programme and we have ensured that Zimbabwe is discussed at the United Nations Security Council. We in the EU have put pressure on Zimbabwe at the UN Human Rights Council. We are clear that action needs to be taken, but the UK cannot do that alone; we need to work with other people. African countries in particular need to act on the matter.

Middle East Peace Process

Patrick Cormack: If he will make a statement on the progress made in the middle east peace process.

Kim Howells: The Government believe that the UK must be involved in seeking genuine progress on the middle east peace process. With the combination of the continuing dialogue between Prime Minister Olmert and President Abbas, Tony Blair's engagement, an international meeting scheduled for November and a rejuvenated Arab peace initiative, the prospect of progress appears more promising than it did at the start of the summer. We will continue to work with international partners to move us closer to a two-state solution.

Patrick Cormack: I thank the Minister for that answer and his robust attitude to the matter. What plans do the Government have for convening a formal meeting of the Quartet and arranging for former Prime Minister Blair to brief Members of the House of Commons on his actions?

Kim Howells: I certainly think it is a very good idea for former Prime Minister Blair to come to the Commons to brief an all-party meeting on the issue. I shall certainly put that to him and I hope that he will do so. As for a Quartet meeting, there are of course regular such meetings. There will be one in the run-up to the November conference that is being organised in the United States. It ought to be an important conference and we are pinning a lot of hope on it.

Richard Burden: May I tell my hon. Friend that last month I discussed with businessmen in the north of Gaza their plans just to export like businessmen in any other part of the world, but that their ability to do so is being strangled by the Israelis' continuing blockade of the Karni crossing? The blockade does not affect the firing of rockets from Gaza, but does collectively punish the innocent people of Gaza. What are the Government doing to ensure that the excuses are put on one side and that the Karni crossing is opened as it should be?

Kim Howells: I assure my hon. Friend that, along with my right hon. Friends, I have been pressing the Israeli Government to open the Karni crossing. He is quite right and has great experience of the issue. It is interesting to hear that he has held discussions about the issue in northern Gaza, because it is one of the most crucial issues. I cannot for the life of me understand how Israel believes it can have an economic basket case on its border, because there is no more potent way of generating violence and opposition to the idea of a two-state solution than strangling the economy of one's neighbour.

Hugo Swire: The Minister is entirely right in what he has just said. However, is he also aware that the United Nations Relief and Works Agency is unable to get necessary supplies into Gaza because of what is effectively a blockade and that it is thus unable to help to build temporary accommodation for the many refugees who are in Gaza? The situation in Gaza is getting more difficult as a result and encouraging the sort of behaviour that none of us wants to see.

Kim Howells: Yes, we have been very worried that that reading of the situation in Gaza is going to make things worse. We recently gave £1 million extra to the International Committee of the Red Cross to meet some of the extreme humanitarian problems inside Gaza. We are glad to see that UNRWA is now lobbying widely, in Europe and the rest of the world, to make people aware of just how acute the difficulties are inside Gaza. That is something on which we shall continue to lobby, as it is a very important issue.

Louise Ellman: How does my hon. Friend assess the impact of Iran's actions on current attempts to reach peace in the middle east, particularly following the statement by Iran's judiciary chief on 5 October, when he described the rallies in Tehran as a good start to the destruction of Israel?

Kim Howells: Iran is playing a mischievous role. The Iranians' support for the extreme elements of Hamas and for Hezbollah in Lebanon is an indication that they do not want a two-state solution. They want to destroy Israel, and as far as they are concerned, the quicker the better.

Alistair Carmichael: May I associate myself with the comments of the hon. Member for Birmingham, Northfield (Richard Burden)? I was with him in northern Gaza last month, when we met the businessmen whom he described. Will the Minister stress to the Israeli Government that closure of the borders is now creating a burgeoning humanitarian crisis that will not wait until November to be resolved? It is hurting the ordinary people in the Gaza strip, not the Hamas Administration. We should not confuse one with the other.

Kim Howells: Yes, I take that point clearly. I am glad that the hon. Gentleman managed to get into northern Gaza and hold those discussions. We do not want to hurt the ordinary people of Gaza. Nobody wants to do that; indeed, I do not believe that opinion inside Israel is in favour of that. The Israelis have had long experience of suffering as a consequence of the terrorism that has been generated inside Gaza and other areas where such difficulties have occurred.
	At the same time, there must be pressure on Palestinian and Israeli neighbours to do their utmost to ensure that the supply of rockets and weapons to Hamas militants and jihadists inside Gaza is also curtailed and that those people are not firing rockets into Israel, because that does not help the argument either. However, the hon. Gentleman is quite right. The issue is immensely important and I agree with him entirely.

Fiona Mactaggart: To follow up on the points that colleagues have made about the importance of the economy of Palestine, does my hon. Friend recognise that the Balls and Cunliffe report made it clear that there is high and growing unemployment among the Palestinian people and that that is increasingly speedily making the situation worse? What can the British Government do to help to tackle that crisis?

Kim Howells: The British Government, led by my right hon. Friend the Prime Minister when he was Chancellor of the Exchequer, have worked very hard to try to raise international consciousness of the need to provide employment and housing for so many people in Gaza. There is a new generation of young people there now who will not have jobs, and of even younger people who will not have an education. It is extremely important that we pay attention to that, and I think that we have a good record of trying to do so. However, we can introduce any plan for economic reconstruction that we like, but if we cannot get the politics fixed, we will never build a house or a road in Gaza, or do any of the things for the infrastructure that we want to do. We have to get the politics right, and that is why these international agreements and the other work that we are doing on the middle east peace process are so important. That is absolutely crucial if we are to take forward my hon. Friend's agenda for economic reconstruction.

EU Intergovernmental Conference

David Gauke: If he will make a statement on progress in the EU intergovernmental conference.

Jim Murphy: The legal group producing the draft treaty finished its work on 3 October. The United Kingdom has set out our red lines and we are determined that they will be delivered. We will continue to press, right up until the December European Council, to ensure that they are met.

David Gauke: The Government's case relies almost entirely on the effectiveness of the red lines, but today's report from the European Scrutiny Committee makes it clear that there may well be an argument that the charter of fundamental rights will apply to the UK. In those circumstances, and if there were a dispute—the report makes it clear that there might well be—can the Minister confirm that it would be the European Court of Justice, not Parliament, that would decide whether the charter applied in the UK?

Jim Murphy: The Foreign Secretary has already made it clear today that the constitutional approach has been abandoned. On the hon. Gentleman's specific point about the legally binding protocol and the charter of fundamental rights, it is absolutely clear that the protocol has the same legal force as European treaties. That is a very strong legal protection indeed.

Andrew MacKinlay: Why has the Minister not responded to my point of order yesterday—it appears at column 57 and was supported by the Deputy Speaker—in which I complained that the documents—

Mr. Speaker: Order. The hon. Gentleman must not draw the Chair into any arguments that he has.

Andrew MacKinlay: Sorry about that, but my point of order related to the fact that the documents to which I referred were not in the Vote Office yesterday, and they were not there before Prayers today. They should be available so that we can quiz the Foreign Secretary tomorrow afternoon, not only in the Chamber but in the Foreign Affairs Select Committee. Will the Minister ensure that the legislation on this is not so narrowly drawn and crafted that we cannot table an amendment that is acceptable to the Table Office relating to the ability to have a referendum? We want an assurance that the legislation will be drafted so as to leave that scope open to Parliament. What say you?

Jim Murphy: On the specific point about publications and paperwork being available, it is certainly my understanding, and that of the Foreign Secretary, that that material was placed in the Libraries of the House of Commons and the House of Lords on Friday last week, when it became available. I hope that my hon. Friend will accept that, throughout this process in recent months, we have shared with his Committee and others all the material as it became available. On his wider point about the breadth of the Bill, the House has a long tradition of enabling European Bills to be amended in relation to calls for a referendum. After all, one third of those currently on the Conservative Front Bench voted against such a referendum on Maastricht. As I have said before, and am happy to say again, it would certainly be our intention—with your permission, of course, Mr. Speaker; it is entirely a matter for your discretion—to craft the Bill widely enough so that an amendment calling for a referendum on the reform treaty could take place.

Douglas Hogg: The Minister has clearly looked at the scrutiny report and will have read its paragraph 71, where the Committee characterises the drafting process as
	"essentially secret...conducted by the Presidency, with texts produced at the last moment".
	It goes on to say:
	"The compressed timetable now proposed, having regard to the sitting terms of national parliaments, could not have been better designed to marginalise their role."
	Do the Government agree with that view?

Jim Murphy: Not at all. At every opportunity, the Foreign Secretary and I have sought to be available to the Select Committees of this House. I believe that I have given evidence on five separate occasions to such Committees, and my right hon. Friend the Foreign Secretary has also spoken in glowing terms of his anticipation of appearing before Select Committees. The fact is that the reform treaty gives greater powers to national Parliaments, and it remains the case that it is this House and the other place that will ultimately take a view on whether or not to ratify that reform treaty.

Gisela Stuart: The Foreign Secretary seemed to suggest in an earlier answer that the draft of the document now available since 3 October is so different that it invalidates the findings and some of the conclusions of the European Scrutiny Committee. He suggested that the conclusions were drawn before the Committee had sight of the 3 October document, which implies that there have been significant changes. Will the Minister for Europe indicate just two or three changes in the document of 3 October that were not present in the earlier version?

Jim Murphy: My right hon. Friend the Foreign Secretary was recording a statement of fact. The Select Committee report was drafted and went to publication before the legal text was available. That was my right hon. Friend's point. The differences between the old constitutional treaty and the reform treaty are very clear. Every member state has moved away from the old constitutional approach and it is quite clear that it is the end for those who had a federalist dream or a federalist vision for Europe. It is equally clear that of all the member states of the European Union, the United Kingdom has moved furthest away from the old constitution.

Mark Francois: What is clear is that it has hardly changed at all. Yesterday's press release on the Downing street website said that if the red lines were not met
	"there will either be a veto or there will be a referendum".
	Given that the European Scrutiny Committee has now cast very serious doubt about the Government's red lines and its Chairman told the BBC this morning that they would "leak like a sieve", will Ministers now admit that they are morally bound to offer the British people the referendum that they themselves promised them in the first place?

Jim Murphy: Not at all. It is absolutely clear that the legally binding protocol and the charter of fundamental rights offer very strong protection indeed. That is acknowledged by other member states and other prominent politicians. As the president of the European Parliament, Hans-Gert Pöttering— [Interruption.] The shadow Minister for Europe, the hon. Member for Rayleigh (Mr. Francois), scoffs at him, but the president of the European Parliament is a gentleman and a Conservative. In other places, those things are not mutually exclusive. The president said:
	"Since making the Charter legally binding and extending Community competence to JHA were two of the most important features of the original constitution, the deal struck by Tony Blair in June means that—for better or worse—much of its substance will simply not apply in Britain."

Iran

Bernard Jenkin: If he will make a statement on the Iranian nuclear programme.

David Miliband: Iran has every right to be a secure, rich country. However, it does not have the right to set off a nuclear arms race in the middle east. That is why we deplore its continued enrichment of uranium in defiance of three UN Security Council resolutions. We will continue to work with our E3 plus 3 partners—France, Germany, Russia, the US and China—and with our EU colleagues to persuade Iran to suspend all reprocessing and enrichment-related activities and return to negotiations on the basis of the far-reaching proposals that we presented in June 2006.

Bernard Jenkin: Will the Foreign Secretary tell the House, in a word, whether there is any substantial difference between the policy of the United Kingdom Government and that of the United States Administration?

David Miliband: We are joint members of the E3 plus 3 process. Six countries are leading the diplomatic effort. We are working together with the United States, Russia, France, Germany and China, as I said in my answer to the hon. Gentleman's main question.

Gordon Banks: What discussions is my right hon. Friend having with Iran's neighbours to prevent any expansion of nuclear proliferation in the region should the worst happen?

David Miliband: Obviously I have spoken to the Iranian Foreign Minister himself. I talked to him about the risks that he was taking, not just for his own country but for the region and the wider world. In discussions with Egyptian, Saudi and other Foreign Ministers and ambassadors, I have emphasised our concern for the non-proliferation treaty to be respected, and for Iran not to play the proliferating role that is so dangerous in the current circumstances.

Malcolm Rifkind: Does the Foreign Secretary agree that if military action against Iran is to be discouraged, it is crucial for there to be a robust and effective alternative that cannot be scuppered by Russian or Chinese vetoes? As President Sarkozy of France—along with the United States—is enthusiastically calling for financial and banking sanctions against Iran, and as Deutsche Bank, UBS, HBSC and other banks are already responding, will the Foreign Secretary do all in his power to encourage other European Union countries, particularly Germany, Italy and Spain, to support such a policy?

David Miliband: The right hon. and learned Gentleman's general point about the importance of the diplomatic route having proper teeth is absolutely correct. He could have added Standard Chartered to the list of banks that he mentioned.
	The right hon. and learned Gentleman will be interested to know that in the year to May 2007, EU trade with Iran fell by 34 per cent., which constitutes a significant tightening of the sanctions. We are exploring all avenues. I will of course discuss the matter with EU colleagues next week, and will continue to monitor it at an international level.

Ken Purchase: Iran is almost certainly in breach of its undertaking on the non-proliferation treaty, given that it is a signatory. It is our duty to ensure that the treaty is enforced: it has maintained a very good record over many years. However, the policy lacks some coherence when we are prepared to tolerate the development of nuclear weapons in Pakistan and India—and, indeed, welcome it, as the Americans did recently. We really must have a coherent and comprehensive policy if we expect to make real progress on the Iranian problem.

David Miliband: I understand my hon. Friend's point, but I think he will agree that the present situation in regard to India and Pakistan is far preferable to that which existed in 2002, when people were extremely worried about relations between the two countries. I think that the efforts by the Governments of both countries to lower the temperature in the region should be recognised, notwithstanding my hon. Friend's point about nuclear weapons.

Roger Gale: Does the Foreign Secretary believe that prospects for the development of nuclear weapons by Iran would be strengthened or weakened if the British Government lifted its illegal prohibition and proscription of the People's Mujaheddin Organisation of Iran and the National Council of Resistance of Iran?

David Miliband: I think I am right in saying that the issue is currently before the courts, and in that context it would be very unwise of me to venture any opinion.

John Maples: Have there been any discussions at any level between the British Government and the United States Administration about the possibility of taking military action against Iran?

David Miliband: As I have said—and as representatives of the United States Administration right up to the top have said on every occasion—we are 100 per cent. focused on the diplomatic process, and on making the diplomatic route work. That is what we will continue to argue and urge in all forums.

Iraq

Jim Sheridan: What assessment the UK has made of EU and UN involvement in Iraq.

Kim Howells: The United Nations Secretary-General is clear that the UN has a significant role. We welcome the appointment of a new special representative: he has our full support in implementing the UN's role under Security Council resolution 1770.
	The EU is committed to developing its engagement and supporting the UN. We welcome the recent high-profile visits by the Swedish and French Foreign Ministers, and the discussion stimulated within the EU.

Jim Sheridan: I welcome the Minister's response. Will he join me in welcoming the recent statements by the French Government and the EU High Representative, Javier Solana, on the need to help and to co-ordinate the reconstruction work of the Iraqi Government and indeed their allies in projects such as Operation Sinbad, which has recently ended in Basra? Will he expand on the success of that project?

Kim Howells: That is an important question. The effect of Operation Sinbad on employment levels, for example, in Basra has been significant. There is a long way to go, though. Basra is still suffering greatly. There is an enormous amount of work to do on infrastructure. It will be helped if EU nations and wealthy nations of the west realise that that reconstruction helps everyone, not just the people of Basra and Iraq. It will help to prove that a democracy can function well in the middle east, ensuring that people are employed, children are educated and the health system works. It will become a model for the rest of the region.

Jeremy Corbyn: The Minister will be well aware that there are possibly as many as 2 million internally displaced Iraqis and that possibly as many as 2 million people have fled to a place of safety in neighbouring countries. What support is being offered to Jordan and Syria to cope with that very large influx of desperate people? What is being done to support the people who have been displaced within Iraq, who are living in desperate poverty, without any support or services whatever?

Kim Howells: My hon. Friend has asked an important question. This Government have given a great deal of financial support to try to help to improve the humanitarian situation. We know that the Governments of Syria and Jordan especially require a lot more help. We have been lobbying to ensure that our partners in Europe give some money for humanitarian support as well and, even more importantly, that the very wealthy neighbours of Iraq, Jordan and Syria, especially the oil Governments of the Gulf, realise that they have a role to play too and that they could alleviate that suffering significantly.

EU Treaty (Climate Change)

Quentin Davies: rose—

Hon. Members: Hear, hear.

Mr. Speaker: Order. First, the hon. Gentleman must say "Question No. 10".

Quentin Davies: What assessment he has made of the likely impact on the ability of the UK and its European partners to combat climate change of proposed changes to qualified majority voting in the new EU treaty.

Jim Murphy: In response to the question tabled by my hon. Friend, I make it clear that the EU can be effective in tackling climate change. That process began with the targets agreed at the spring European Council this year. The move to QMV under the reform treaty will help by removing the veto of any one country on the liberalisation of energy markets and steps to improve energy diversity.

Quentin Davies: I am sorry; I was put off earlier by the unusual applause, to which I am not accustomed.
	Is it not clear that, if we in the EU are going to make our contribution to meeting the challenge of global warming and to achieve our high, demanding and necessary targets for reductions in carbon emissions, we need to get the necessary implementing legislation through in a timely fashion and unambiguously and that, for that purpose, we need to have QMV in a Union of 27 members? Therefore, is there not evidently more than the usual degree of confusion in the minds of those on the Opposition Benches who claim— [Interruption.]

Mr. Speaker: Order. I think that the Minister might be able to give the hon. Gentleman a reply.

Jim Murphy: My hon. Friend is giving yet another reminder of why he left the Opposition Benches and joined us. Opposition Members scowl and dismiss. Euroscepticism is now a mainstream ideology for the Conservative party. The reform treaty provides, for the first time, an opportunity to unblock decision making. It will give the United Kingdom and the European Union the capacity to deliver change and effective improvements on one of the biggest issues facing the EU. That is one of the important parts of the reform treaty. It is one of the reasons why Labour Members support it so wholeheartedly.

Pakistan (Detentions)

Paul Rowen: How many cases there have been of British citizens under the age of 18 being detained by Pakistan authorities while custody issues are considered by the Pakistan High Court in the last five years; and what support the high commission has provided in such cases.

Meg Munn: We are not aware of any British citizens under 18 who have been detained by the Pakistani authorities in the last five years while custody issues are considered. We have, however, provided consular assistance to many British parents involved in custody disputes and child abduction cases in Pakistan. When providing such assistance, we take care that our actions do not contravene Pakistan law and any determination by the Pakistan courts.

Paul Rowen: I thank the Minister for that answer. I am sure that she is aware of the case of my constituent, Asma Akhtar, who is currently involved in a child custody case in the Pakistan High Court. Such cases are covered by a protocol. In view of the difficulties Asma is experiencing, will the Minister undertake to review the operation of that protocol?

Meg Munn: The UK-Pakistan protocol is in place to enable us to come to decisions on children's welfare in such custody disputes regardless of whether the child is in Pakistan or the UK, and it is operating. We need to keep it under review, and next year we will have an international child abduction conference in Islamabad to promote greater awareness of that protocol on children's matters and how it can assist in reducing the number of child abduction cases."

Pre-Budget Report and Comprehensive Spending Review

Alistair Darling: Today I can present the pre-Budget report and the conclusions of the comprehensive spending review. The background to this year's report and spending review is a time of increased international economic uncertainty and a more fragile global environment which has already seen turbulence in America, Asia and Europe. The theme of this year's pre-Budget report is that, provided we maintain the course for economic stability that we have set, we can respond to that global environment. We will do so by taking no risks with stability and no risks with unaffordable promises that put the public finances at risk. We can respond as well to the rising aspirations of the British people, and we can do that by taking the right long-term decisions for our country. Today I will set out how we will maintain that stability and strong economy, meet our international obligations, improve our public services and invest more in the highest standard of education and health care, and equip our country for the future as we meet these new global challenges.
	Let me start with the economic figures. In March, inflation had risen to over 3 per cent. but decisive action has brought it down to below our target of 2 per cent., and I am able to forecast that inflation will again be on target next year and the year after. We are determined to hold firm to our economic framework, which has proved resilient over the past 10 years and which we can be confident will do so now and in the future. While this year growth in America is expected to be 2 per cent., in Japan 2.3 per cent. and in the euro area 2.6 per cent., growth in Britain—with exports and investment rising and employment at record levels—is expected to be 3 per cent. this year: Britain, the fastest growing major advanced economy in the world.
	That underlying strength of the economy will stand us in good stead as we face the current international instability that started in the American mortgage market and has now spread across the world. The full impact of turbulence in the international financial markets is as yet unclear. The House will rightly want to discuss in some detail the current international instability and its effect on Northern Rock, and I intend to make a full statement to the House later this week. The International Monetary Fund has said that this international uncertainty will have an effect on growth right across the world, and independent forecasters expect growth next year in America, the euro area and Japan to fall to 2 and 2&frac12; per cent. In those circumstances, it is right that we, too, are cautious. So my forecast for growth next year is also 2 to 2&frac12; per cent.  [Interruption.] But because of the strength of our economy, our commitment to openness and liberalised trade across the world— [Interruption.]

Mr. Speaker: Order. The Chancellor of the Exchequer is making a statement; I want him to be heard.

Alistair Darling: It is because of the strength of our economy and our commitment to openness and liberalised trade across the world, and our flexibility and dynamism here at home, that my forecast for growth in 2009 and 2010 is 2&frac12; to 3 per cent., in line with the economy's trend rate of growth and in line with the Budget forecast.
	We can afford sustained investment in our priorities only because of our two fiscal rules that ensure sound public finances. I can report that last year, borrowing was 2.3 per cent. of national income—£4 billion less than forecast. I can also report that debt was 36.7 per cent., also less than forecast. Over the past 10 years of this economic cycle, borrowing and debt in Britain have been lower than in Japan, the euro area, America and the Organisation for Economic Co-operation and Development area as a whole.
	I can tell the House that we are meeting our first fiscal rule with the current budget and surplus over the cycle. In the previous economic cycle, from 1986 to 1997, that rule was missed, with a deficit of £240 billion. But over this cycle, with a current budget deficit last year lower than forecast, we have a surplus of £18 billion and we are therefore meeting our first fiscal rule. Even taking into account the impact of what is happening in the financial markets, we have a current balance going forward of minus £8 billion this year, then minus £4 billion, then surpluses of £3 billion, £9 billion, £14 billion and £20 billion by 2012-13. So we will meet our rule in the next cycle.
	We will also meet our second rule that net debt should be at a sustainable level. In America, debt is 44 per cent. It is 49 per cent. across the euro area, 86 per cent. in Japan and 94 per cent. in Italy. The figures in Britain are 37.6 per cent. this year and then 38.4 per cent., 38.8 per cent., 38.9 per cent., 38.8 per cent., and 38.6 per cent. in 2012, so meeting our second fiscal rule. Debt interest was 3&frac12; per cent. of national income in 1997. Next year, it is expected to be just 2 per cent. That low debt allows more investment in front-line services. Net borrowing is forecast to fall from 2.7 per cent. this year to 1.3 per cent. in 2012, compared with a peak in 1993 of almost 8 per cent.—the equivalent of £110 billion today. The measures that I am taking in this pre-Budget report allow fiscal policy to support the economy while ensuring that the fiscal rules are met. As a result, net borrowing is forecast to fall from £38 billion this year to £23 billion in 2012.
	In this cycle and the next we are meeting both our fiscal rules: borrowing not for current consumption, but for investment in Britain's priorities. As the Prime Minister made clear in the Budget earlier this year, this spending review is tighter for many Departments—all the more reason to identify increased efficiencies and savings. The spending review has identified substantial savings that can be made by Departments. Building on the £20 billion already achieved, Departments will save a further £30 billion by 2010. That is money available for reinvestment in public services. In addition to that, asset sales in four years' time will have reached £36 billion, reducing debt and releasing further resources. Departmental plans will be published, setting out in detail how these savings will be achieved.
	We are also seeing the rewards that can come from a successful economy and record levels of employment. Just under a decade and a half ago, as much as three quarters of all new public spending was spent on debt and social security costs. The figure for this spending review will be a third of that. Today I can announce that, because unemployment continues to fall, we will spend £400 million less than forecast in each year of the spending review on the costs of economic failure.
	Those three elements—a strong economy, sound public finances and efficiencies—make possible the investment that I can announce today. Departmental spending will rise from £345 billion this year to £397 billion in 2010. Departmental spending is published today; investment will be matched by reform and clear objectives, set out in new public service agreements, which we are also publishing today.
	Let me now turn to our proposals. The foremost duty of any Government is protecting our country. The whole House will want to join me in acknowledging the dedication and courage of our armed forces in action overseas, including in Iraq and Afghanistan. To support our armed forces and all that they do, I am today allocating an additional £400 million for operations this year. That is on top of the increase in the defence budget to £37 billion by 2010 that will provide over £500 million-worth of investment for improvements in accommodation for members of the armed forces and their families. In the mid-1990s, defence spending was cut by 20 per cent. This settlement is the longest period of rising investment in the defence of our country for almost 30 years.
	Matching our commitment to international security with international diplomacy, we will increase the Foreign Office budget, including spending £460 million in 2010 on the British Council, the BBC World Service and the launch of the BBC Farsi and Arabic TV channels.
	The terrorist attacks in July 2005 and the attacks since remind us all of the constant threat to our security here in Britain, and of the critical importance of our police and security services. Since 2001, spending on security and intelligence has more than doubled to £2&frac12; billion a year. I can now announce a new single budget that brings together the work of the police, the security services and all parts of the Government responsible for addressing the threat from terrorism. The budget for the intelligence agencies will continue its historic real-terms growth since 2001, with real growth over this period of 9.6 per cent. a year. I can announce that the single budget will rise every year over the next three years—a rise of £1 billion in total, to £3&frac12; billion a year in three years' time. That is a trebling in cash terms in a single decade. It also includes £700 million over the next three years for the Home Office for its work in combating the terrorist threat. Overall, I am allocating additional resources to the Home Office and Ministry of Justice that will now rise to £20 billion by 2010, as we guarantee neighbourhood policing in every community, build 9,500 extra prison places and finance over £400 million in technology to strengthen our border security.
	Our ability to compete and succeed in the global age will depend on our competitiveness and continuing investment in our economy. Britain's future success will depend on investment not just in physical capital but in skills, innovation and intellectual property. I am publishing today a new analysis which shows that Britain could now be investing as much in those areas as the United States of America. That means that almost £250 billion a year—up to a quarter of today's income—is being invested in the priorities essential for securing tomorrow's prosperity.
	Lord Sainsbury's science review reported last week, and I can confirm that investment in science and university research will rise to over £6 billion a year in three years' time. That will help to ensure that British research and industry are brought closer together to develop the new products and services that the world wants to buy.
	Britain has more Nobel prize winners than any country outside the US. Yesterday, another prize was awarded for medical research, and that is testament to Britain's continued scientific success, which is recognised across the world. So that more British medical discovery can be translated into new health drugs, treatments and preventions, I can today announce that I am funding in full the recommendations of Sir David Cooksey's review. We will expand the single fund for health research to £1.7 billion by 2010.
	In the past, we paid a heavy price as a country for failing to invest when it was necessary, particularly in transport. We are putting that right and will double investment. By 2010, it will rise to £14&frac12; billion a year, providing extra money for strategic road schemes such as the widening of the M1 and M6, and £1.3 billion a year for improving local and regional transport across the country. In addition, we will double the amount that we spend over the next two years on upgrading the national rail network, ahead of a further £15 billion for railways over the following five years. This also provides for the construction of Crossrail, which will be the largest transport project since the channel tunnel and essential for the competitiveness of not just the City of London but the whole country.
	However, because transport requires investment year after year and decade after decade, I am extending to 2018 the long-term funding guideline of annual growth of 2&frac14; per cent. above inflation. That is possible only because of our commitment and ability to fund those long-term improvements. I am also today publishing proposals to give local authorities the power to set a business rate supplement for investment and local economic development, so that with their support they can provide opportunities for business expansion.
	Making Britain one of the best places in the world to do business also demands a modern tax regime based on three clear principles: that our system is competitive, simple and fair. I confirm that the main rate of corporation tax will be cut by 2p to 28p next year. That is the lowest in the G7.
	Working with business, we need to do more. I am announcing three reviews proposing simplification to the tax system that will let 3 million self-employed people pay their tax and national insurance contributions more easily and 500,000 businesses reduce their paperwork by removing a separate payroll. Taken together with other measures that I am proposing today, that will save British business up to £100 million a year.
	The capital gains tax regime here has continued to encourage investment and enterprise. I now propose reforms to make the system more straightforward and sustainable; to ensure that it sets consistent incentives for investment and enterprise; and to ensure that it remains internationally competitive. The new code of conduct for private equity firms drawn up by Sir David Walker will be published next month and will set out much needed steps for increased transparency and disclosure.
	I can tell the House that the changes that I propose to capital gains tax also, taken together with the tax loopholes that I am closing, will ensure that those working in private equity pay a fairer share. So from April next year I will withdraw the capital gains tax taper relief and in its place there will be just one rate of 18 per cent.—one of the most competitive single rates of any major economy. I am also proposing measures to combat income shifting, vehicle excise duty evasion, and to tackle the exploitation of national insurance exemptions.
	I believe that it is right that everyone who lives and works here should pay their fair share. I therefore propose to close a number of loopholes which have allowed some people to avoid taxes that everyone else has to pay. Non-domiciled taxpayers already pay about £4 billion on their earnings. Any proposal for change has to be fair, workable and affordable. I can tell the House that I have examined proposals to impose a flat-rate annual charge of £25,000 on 150,000 non-domiciled taxpayers, which it is claimed would raise £3&frac12; billion. There are in fact only 115,000 registered non-domiciles. I can tell the House, too, that if the charge of £25,000 were imposed, only an estimated 15,000 of those would earn sufficient money abroad to make it worth while to maintain non-domiciled status.
	As a result, the combined effect of people paying this charge or changing their tax status would be revenue not of £3.5 billion but of only £650 million a year at most—a shortfall of more than £2 billion. In addition to that, such a charge could discourage men and women—doctors and nurses, business men and women—from coming to this country in the short term. Such men and women do pay tax on their earnings here, and do contribute to the country's wealth, and we do not want to turn them away. So I will now consult with a view to early legislation on an alternative route. As a first step, we will introduce a charge after seven years, then a higher rate after 10. We will prevent people claiming that they are out of the country when they are actually here, from disguising income as capital and from claiming in effect two allowances; and for completeness we will introduce a flat-rate charge for everyone. Those measures will raise an average of £650 million.
	The two great challenges for this generation are the need to tackle climate change and poverty across the world. So alongside the pre-Budget report I am publishing the next stage of the implementation of the Stern review, setting out how Britain is meeting its environmental obligations. We are the only country to have met our Kyoto obligations. We have reduced our greenhouse gas emissions by almost a fifth since 1990.
	Next month, when the climate change Bill comes before the House, we will become the first country to introduce legislation on binding carbon targets. I am today increasing the budget for the Department for Environment, Food and Rural Affairs to £4 billion in three years' time to help us tackle climate change and protect the countryside. I can confirm that that includes provision of £800 million a year by 2010 for flood defences. We now need to move further and faster on the next stage of the European emissions trading scheme. As part of that, we propose to increase significantly the use of the auctioning of carbon allowances, as we move further towards a low-carbon future.
	Today I am also publishing an interim report by Professor Julia King, which shows that, by choosing the most efficient cars on the market today, drivers can cut emissions and their fuel bills by up to a quarter, and that with new technology and cleaner power we could cut carbon emissions from cars by up to 80 per cent. I will bring forward proposals in the Budget, after Professor King's final report, on ways to encourage the next generation of cleaner cars and incentives for people to buy them.
	Air travel accounts for a growing share of carbon emissions, so it is right that aircraft emissions should be part of the EU emissions trading scheme. I also propose that aviation makes a greater contribution in respect of its environmental impact. For that to be as environmentally effective as possible, I intend from 2009 to levy the duty not on individual passengers but on flights, to encourage greater and more efficient use of planes.
	I can also announce a new environmental transformation fund, and that fund will have a three-year budget of £1.2 billion, which will provide investment in new energy technologies here at home and resources to meet our obligation to support poverty reduction in the poorest countries through environmental protection.
	I believe that it is to the lasting shame of this country that, in the 1980s and 1990s, aid to developing countries from Britain fell by almost a quarter. In 1997, we devoted just £2 billion—a quarter of 1 per cent. of our national income—to development aid. That figure today is over £5 billion, and today I can announce that overseas aid will rise again to £9 billion by 2010. In doing so, we will meet our commitment to double multilateral and bilateral aid to Africa from 2004 to 2010. That puts us on course to meet our European commitment of 0.5 per cent. of national income devoted to development aid by 2010; and then to meet our commitment to achieve, for the first time, the United Nations goal of 0.7 per cent by 2013. I can tell the House that we will meet all our international obligations to developing countries in full.
	In the 20 years up to 1997, child poverty in Britain doubled. Since then, we have lifted 600,000 children out of poverty. Two and a half million more people are in employment. We believe that helping people into work is the best way of cutting child poverty and providing opportunity, which is why we shall continue to support the new deal. For the first time in 30 years, the number of people on incapacity benefit is falling, with almost 100,000 people taken off the incapacity benefit roll in the past two years. The roll-out of pathways to work will bring together the public, private and voluntary sectors to help more people into work.
	I can confirm that, with 300,000 more lone parents in employment compared with 10 years ago, we can help even more lone parents by extending the top-up that they receive for the first 12 months that they spend back in work. In addition, I can also announce today further measures to take more children out of poverty. First, I am doubling the amount of child maintenance that a family can receive without affecting their family benefits to £20 a week next year and then £40 a week in 2010. Secondly, I am increasing the child tax credit by a total of £175 a year from next April, with a further increase in 2010, so that, for families on low incomes, children's benefits and tax credits will be worth at least £3,500 a year for the first child. Taken together, those measures will lift a further 100,000 children out of poverty.
	Next year's rise in the basic state pension and other benefits will be announced later this month, but the pension credit for older people with just a small pension of their own will rise from next April by £5 a week and £260 a year for a single person and by £7.65 a week and £397 a year for a couple. That guarantees every person over the age of 60 at least £6,450 a year. We will bring forward the start date for flat-rating the state second pension to 2009.
	I can announce that direct funding for social care will increase to £1.4 billion by 2010. That will help to provide new homes for older people and help people with disabilities to live independently in the community, as well as offering more services for carers. I can also announce an extra £200 million next year to deliver on our commitment to every pensioner and disabled person in England—guaranteed free off-peak national bus travel.
	Today, home ownership is at 70 per cent.—that is nearly 2 million more than 10 years ago—but we need to do more; we need to ensure that there are homes for people to buy. Last year the number of homes increased by 185,000. That is the largest increase for nearly 20 years. Planning reforms that are coming before the House will help the building of more homes in an economically and environmentally sustainable way, as we provide additional investment to increase the level of house building to 240,000 a year by 2016. In total, that is an extra 3 million new homes between now and 2020.
	I can announce that we will also spend over £4 billion over the next three years to help people living in poor quality housing to make renovations to their homes, so that by 2010, some 1.9 million of the poorest children and 1.7 million pensioners will have benefited. As we build more homes, we need to ensure that properties are not left unrented, unsold or unavailable for people to live in. I am introducing measures today that will help to bring empty residential properties back on to the market.
	Buying a home is probably the biggest investment that people make in their lives. Fixed-rate mortgages can offer more certainty. I want to see more fixed-rate mortgages not for just two years but for 10 years or even longer. I will bring forward proposals at the Budget on reforms to help lenders to ensure that more people can fix their mortgages as a matter of routine, if it is right for them. As we prepare plans for more home building, for eco towns and for shared equity, we will also consider how else we can increase the supply of housing to help first-time buyers to enter the market.
	Grants to local authorities for local services in England will increase to £26 billion by 2010. We have provided sufficient resources to ensure that local authorities can keep council tax rises substantially below 5 per cent. The budget for the Department for Culture, Media and Sport will increase to £2.2 billion in three years' time. That guarantees an inflation increase for the arts, free access to museums and galleries, and extra sport, so that every child and young person can take part in sport for five hours a week. It will also deliver the cultural Olympiad in the run-up to London 2012.
	I can also set out the total settlements for the devolved Administrations in Scotland, Wales and Northern Ireland, giving them their full entitlement. In Scotland the figure will rise to £30 billion in 2010; in Wales it will rise to £16 billion; and in Northern Ireland it will rise to £10 billion. That, of course, is in addition to spending in Scotland, Wales and Northern Ireland on matters that are not devolved, such as spending on defence, tax credits and pensions, which benefit all parts of the United Kingdom.
	I now come to my final decisions. In respect of capital gains tax, there is currently transferability between spouses, to recognise the fact that capital assets are built up jointly over a lifetime. In inheritance tax, there is currently 100 per cent. spouse relief over a lifetime, but there is no transferability of allowances. I want to ensure that husbands and wives can benefit from each other's unused inheritance tax exemptions, so I will raise the total amount of inheritance for married couples on which no tax is paid, and this will apply to civil partnerships, too. I can announce that, from today, the combined tax-free allowance for their estates will not be the current £300,000, but up to £600,000. By 2010, the combined tax-free allowance for couples will rise to £700,000. And I can do more: to ensure that people who have already lost their husband or wife will also benefit, I will backdate that indefinitely for every widow or widower.
	Those changes mean certainty for up to 12 million married couples, with an allowance of up to £600,000, rising to £700,000, and the same entitlement for 3 million widows and widowers. That allowance is worth more than the value of 97 per cent. of homes in this country. In future years, we will take both house prices and inflation into account when setting inheritance tax thresholds.
	I now have a further choice to make. As a result of our economic management, I can meet both our fiscal rules and invest more—£2 billion in 2010, in addition to the sum proposed at the Budget. If I was to raise the inheritance tax threshold to £1 million, it would cost a further £2 billion. I found that, under that proposal, £1 billion would go to estates worth more than £950,000—the top 1 per cent.—only. Instead, I decided to go ahead with raising the inheritance tax exemption to £700,000 for married couples and civil partnerships, and invest the additional £2 billion in health and education.
	Let us now have a debate about what is affordable and what is fair in the future of inheritance tax. I welcome that debate. In this statement, I have managed to raise the arts and culture budget; to give the go-ahead for Crossrail; to meet our international obligations on overseas aid; and to double the budget for social housing and expand owner-occupation.
	I can now announce that the final figures for education will be higher than originally proposed. I hope that all parties will support and match these new plans when I explain where the additional money is going. The Budget proposed that investment in education and skills will rise to £74 billion in 2010, increasing education spending as a share of national income rising from 4.5 per cent. 10 years ago to 5.6 per cent. now. Today, I can announce, in addition, further investment, providing a £250 million fund to ensure that all children at school are ready to learn and benefit from personalised support.
	I can also do more for the national health service. Over the next three years, the money we spend will rise again by more than its historic rate: on average, by 4 per cent. above inflation. This new investment will allow us to ensure a maximum wait of 18 weeks from referral to hospital, increased access to GP services and cleaner hospitals.
	With the additional £2 billion I have available, I can now announce that investment in health in England will rise from £90 billion this year to a total of £110 billion in 2010. I could have spent that £2 billion on an inheritance tax reduction for the few wealthiest estates. Instead, I am able to raise the inheritance tax allowance and invest more in schools and hospitals for the British people. That means, in education, helping to build a new primary school in every local area by 2010. In health, when added to its budget, this will deliver 20 new hospitals, 140 new walk-in centres open seven days a week, and 100 new GP practices. We aim to ensure a regular check-up for every adult in the NHS, saving lives and improving the quality of patient care across the country.
	We propose not unaffordable tax cuts that deprive public services of the money they need, but an affordable tax cut and improved investment in health and education, founded on economic stability. I commend this statement to the House.

George Osborne: I do not know why the Prime Minister even bothered to turn up. He should have called that election, and let us give the Budget. Instead, we had a pre-election Budget without the election. We all know that the report was brought forward, so that it could be the starting gun for the campaign, before the Prime Minister took the pistol and fired it into his foot.
	Let us deal straight away with the announcements on aviation, and on non-domiciles and inheritance tax. For 10 years, the Prime Minister has been sucking millions of families into the inheritance tax net. For 10 years, he has been pulling first-time buyers into stamp duty. For 10 years, he could have reformed air passenger duty. For 10 years, he did nothing on non-doms.
	Now, a week after we introduced our plans, the Prime Minister and the Chancellor scrabble around in a panic trying to think of something to say. The Prime Minister talks about setting out his vision of the country, but he has to wait for us to tell him what it is. That is not leadership of this country—it is followership, Prime Minister. It is not strong, Prime Minister, it is weak. He has learned nothing from recent events. The public will see today's measures as a desperate, cynical stunt from a desperate and weak Prime Minister, and the public can tell the difference between a Labour party that sees this all as a cynical, calculating game, and a Conservative party that believes in lower taxes and in aspirations.
	The Chancellor attacked my non-domicile policy, but then announced that he would consult on it. Will he confirm that? From this day on, let there be no doubt about who is winning the battle of ideas in Britain. If the Prime Minister wants to debate our policies, and if he wants to challenge the independent experts who support our costings, he should have the courage to call a general election, but he will not. This Prime Minister's name may appear on the cover of books about courage, but it is never likely to appear in the index.
	These cynical stunts should not distract us from the fact that today was the day when the economic chickens came home to roost. Britain needs a Government who prepare us for the new economic revolution by freeing our economy, reforming public services and putting us on the path to lower taxes. Instead, we got a speech that boils down to this: growth is down, borrowing is up, the spending rate is down, and overall taxes are likely to go up. What a mess after 10 years in office.
	The real charge against the Prime Minister is not just that he got his growth forecasts for the next year wrong, although he did. The real charge against the Prime Minister is, first, that he should have prepared the public finances for a slowdown in the economy, and he did not; and secondly, he should have prepared the public services for a slowdown in spending, but he did not do that, either. The pre-Budget report is the opposite of what a sensible, prudent Government should do.
	Let us look at the public finances. After 15 years of global growth, we should be running a surplus in this country. Instead, we are entering what the Chancellor himself admits are difficult times, with Government borrowing out of control. The Prime Minister told us in last year's Budget that 2007 was the year when the finances would move into the black. Then, in this year's Budget he told us that he was wrong, but that at least borrowing would fall.
	Today the Chancellor admitted that borrowing is going up again. Total borrowing this year is now expected to be £4 billion higher than forecast. We all waited for the moment when, as the former Chancellor used to do, he would rattle off the borrowing figures for the years afterwards, but he entirely missed them out—talk about burying bad news! Indeed, the annual deficit, which he did mention, will be £4 billion higher in the current year. The real tragedy is that the Government should not have borrowed in a boom; they should have saved. Now there is nothing left to prepare Britain for the rainy days that may lie ahead.
	Why did not the Chancellor tell us that the savings ratio has fallen? Page 146 of the report shows that the savings ratio this year has fallen from 5&frac12; per cent. to 3&frac12; per cent. That is the lowest savings ratio on record. He did not tell us that the estimates for the growth of disposable income for millions of families have also fallen sharply from 2&frac12; per cent. to 1&frac12; per cent. this year. Why did he hide those figures? He should be blaming his predecessor, not copying him.
	The Chancellor has not prepared us for the economic slowdown or the spending slowdown. The growth rate of spending has been cut in half. The Chancellor has been forced to share the proceeds of growth. This is another example of us setting the agenda. Why cannot the Chancellor be honest with people about what that means, instead of trying to spin the figures?
	Let us take the education budget. When the more gullible Labour Members cheered, perhaps they did not realise that the Chancellor is cutting the spending growth rate of education in half. The real tragedy is that the Government failed to use the boom years to reform education and prepare it for this slowdown. The building schools for the future programme, which the former Chancellor used to boast about, is now in such a mess that just 14 of the 100 schools that were supposed to open this year will do so. The £1 billion spent on tackling truancy has led to a 45 per cent. rise in it. The question people are asking is simple: where has all the money gone?  [Interruption.]

Mr. Speaker: Order. Members should allow the hon. Gentleman to be heard. Clapping is not in order in this House.

George Osborne: I might try that again: where has all the money gone in health? Why does not the Chancellor be honest with the public about what this health settlement means? The growth of health spending is set almost to halve in the next three years, so a health service that is already seeing maternity wards closing, accident and emergency wings shutting and staggered pay awards for nurses will now have to make do with a much slower rate of spending growth. It would have been able to cope better if the recent spending boom had been matched by reform.
	I know that the Prime Minister has found himself a new health guru, Lord Darzi. Remember him? He is the one whose report sunk without trace last week. The Prime Minister should listen to the previous health guru, Derek Wanless, who says that the hoped-for productivity gains have not been achieved and that a lot of money has been wasted. When Wanless compared our health care with other similar countries, he found that Britain was still lagging on crucial outcomes such as life expectancy, infant mortality, cancer survival and health inequality. The Health Secretary puts it in a more technical way:
	"We've put a lot of money in, but that hasn't led to a lot of happy bunnies".
	Even with today's spending slowdown, this report confirms that the tax burden is now set to reach a record high—at a time when all our global competitors are trying to reduce their taxes. By the way, why did the Chancellor not tell us that this is a tax-raising pre-Budget report? We heard all the talk about inheritance tax and so on, but I see that in 2010-11 there will be a £1.4 billion rise in taxes as a result of the measures that he announced from the Dispatch Box just a few minutes ago.
	This pre-Budget report should have prepared our country for the new economic revolution, but instead we got over-spun claims, desperate stunts and fake figures from a Government who have given us fake photos, fake troop withdrawals and fake hospital openings, all led by a Prime Minister who is increasingly seen as a fake.
	The Chancellor should spare us the Brownite nonsense and save it for the election campaign. Instead, he should give us straight answers to these straight questions. First, will he confirm that the Prime Minister got the growth and borrowing forecasts wrong? Secondly, will he confirm that the growth rate of health and education spending will be cut by almost half? Thirdly, will he confirm what he did not say when he gave his original report: that this report raises taxes overall? Out of curiosity, will he also confirm that he had no plans to reform inheritance tax in this PBR until we made our announcement and he looked at his polls? We know that the Prime Minister cannot give straight answers to straight questions, so let us see whether the Chancellor can do any better—let us see whether he can begin to restore trust in this weak and cynical Government.

Alistair Darling: I thank the shadow Chancellor for his response. It strikes me that he might have benefited —[Interruption.]

Mr. Speaker: Order. Members should let the Chancellor speak.

Alistair Darling: The shadow Chancellor might have benefited from rehearsing his lines a bit longer before he delivered them. Listening to him and to some of his colleagues, it is striking that they find it difficult to acknowledge in this Chamber that we have one of the strongest and most stable economies in the world. They have no difficulty in doing so outside this Chamber when talking to business audiences, when they have to concede that thanks to the stewardship of my right hon. Friend the Prime Minister over the past 10 years we have a very strong and stable economy. It is precisely that stability that will enable us to deal with the international uncertainty that we now face.
	Another striking thing about what the hon. Gentleman said—as he desperately confers with his colleagues on the Front Bench—is how on earth he thinks he can maintain stability when he has made promises during the past week on inheritance tax, stamp duty and tax credits and has no means of delivering on those spending commitments. He has a black hole—£6 billion that he cannot find.
	When he was talking about inheritance tax, the hon. Gentleman said that he set great store by independent experts, so I thought I would check to see which independent expert advised the Conservatives on their inheritance tax policy. I listened to the Leader of the Opposition as he went round the television studios last week, and he kept referring to  Accountancy Age as the authority for the fact that there were so many people not paying tax. I read Accountancy Age and found out the source of this independent expert, and it turned out to be an article in a Sunday newspaper. And when I read the Sunday newspaper to find out where its figure came from, I learned that it was an "unnamed tax expert". How on earth can we have any confidence in a man who wants to be Chancellor when he bases his estimates on what is in a Sunday newspaper, not on firm evidence?
	If the Opposition make promises that they cannot afford, there will be instability, increased borrowing and taxation rises elsewhere, or cuts in health, education and other areas. It is precisely such instability that got the Conservatives into so much trouble when they were last in government. The choice is between an affordable tax cut and irresponsible, unaffordable promises being made by the Conservative party.
	The second striking thing relates to my announcement in my speech that we were able to spend £2 billion on health and education. I noticed that at no point did the hon. Gentleman say whether he would match that commitment. Now, next week and during the next few months, we shall continue to ask the Conservatives whether they are prepared to meet our commitment on health and education. The truth is that they cannot afford to; they are already committed to reductions in tax and increases in expenditure that they cannot afford because they have not identified how they would carry them out.
	The hon. Gentleman criticised us by saying that health spending was not rising as fast as it should. I came into possession of certain information just a few hours ago, and I can tell the House that we are spending more on health than the Conservatives thought. Helpfully, one of their Members—perhaps someone waiting to cross over to us in the next few months—left the Tory crib sheet in the photocopier in the House of Commons. There is a suggested question on this and, by the way, I have all the suggested questions. [Hon. Members: "Answer!"] I intend to answer the question that they have for me in the document. It asks whether the Chancellor can confirm that growth is only 3.5 per cent. a year. The health increase is at 4 per cent. a year—more than the Conservatives thought.
	It is obvious that if the hon. Gentleman had his way, we would have a series of unaffordable promises on tax and spending that his party could not meet. In contrast, we will continue to take no risks with stability and we will continue to build the stability our economy needs because that is the best way of protecting the interests and aspirations of people in this country.

Vincent Cable: I thank the Chancellor for an advance copy of his statement, but 12 of the 18 pages were blank. Is that a new signal of open government and transparency? I congratulate him on adopting our long-standing policy on aviation taxation. There have also been welcome announcements on overseas aid, carers and social housing— [ Interruption. ]

Mr. Speaker: Order. That is bad manners. The hon. Gentleman should be heard and any Member leaving the Chamber should do so quietly.

Vincent Cable: May I also sympathise with the Chancellor for having obviously spent the past 72 hours rewriting a speech that was originally intended to be a chapter in the election manifesto, and for having only just recovered from the ignominy of being the first Chancellor of the Exchequer since 1866 to preside over a run on a bank? Not since Black Wednesday has there been such a collapse of confidence in the authority of Government.
	Let me begin with the key point in the Chancellor's statement: the slowdown in the economy. We are in a rapidly changing and deteriorating environment. In the United States, to which we are closely linked,Alan Greenspan estimated that the risk of a recession approaches 50 per cent. What is the Chancellor's assessment of the risk of a recession in Britain—50 per cent., 30 per cent., 20 per cent., 10 per cent.? It is an important question because factors that could precipitate a recession in the United States—personal debt and a bursting bubble in the housing market—are even more extreme in the United Kingdom.
	Let me put to the Chancellor a question that I posed to his predecessor four years ago. I asked,
	"is not the brutal truth that...the growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level?"—[ Official Report, 13 November 2003; Vol. 413, c. 397.]
	In the subsequent four years, every one of those indicators has deteriorated. Cannot the Chancellor bring himself to accept that millions of families are being squeezed by a combination of reducing disposable income and higher interest rates as a result of moving from fixed-rate mortgages in the next few months? Does not he accept that there is a major vulnerability in the UK economy?
	The slowdown has major implications for the spending review, which makes grim reading for many Departments. The Chancellor has promised the largest increase in health spending. As I understand it, he said today that health spending will grow by 4 per cent. Will he confirm that the Wanless report argued that 4.4 per cent. growth was the absolute minimum required to sustain improvements in patient care? That assumed that the maximum amount of health service reform was achieved, which has clearly not happened. Will he confirm that, when we consider all the spending commitments, the growth that he suggests—I believe that it is 1.9 per cent. a year—is only fractionally higher than that achieved in the 18 years of Conservative government?
	Will not local government now take the biggest hit? Something that did not appear in the statement but is buried in the report is the fact that council tax is due to rise by 5 per cent. a year throughout the UK. That tax bears disproportionately on low-income families and pensioners. At a time when the Chancellor is scrambling to catch up with the Conservatives on inheritance tax, why has he paid no attention to a report and an analysis conducted over four years on the need for reform of that hated and regressive form of taxation?
	On poverty more generally, has the Chancellor made time today to glance at the parliamentary ombudsman's report on tax credits, which has the wonderful, evocative title, "Tax Credits: Getting It Wrong?"? Is he willing to be a little more open-minded than his predecessor and consider the parliamentary ombudsman's recommendations for simplifying and making a great deal fairer that hopelessly overcomplicated system?

Roger Gale: Three hundred thousand cases.

Vincent Cable: Absolutely.
	On taxation, I am glad that, a few months after I introduced a debate in the House on the super-rich, there appears to be an all-party consensus that we should do something about it. However, the Government have got only themselves to blame for their current position with regard to non-domiciled investors. Five years ago, they commissioned a report, which was suppressed under the Freedom of Information Act 2000. The data were released only a few days ago. However, I agree that there is little merit in the idea of a poll tax on non-domiciled investors. It would be unfair to many immigrant workers of modest means and a fleabite to the super-rich. For the Abramovichs of this world, a £25,000 charge is roughly the equivalent of what they would spend on a day out at Stamford Bridge. For the noble Lord Ashcroft, £25,000 is roughly the equivalent of one marginal seat.
	In conclusion, perhaps I could say something a little more positive and sympathetic to the Chancellor. We know from the press releases that he advised the Prime Minister against a dash to the polls and to stay the course. In the light of the gloomy outlook for the British economy, whatever else one says about the Chancellor, he is a very brave man.

Alistair Darling: First, may I apologise if we sent a series of blank sheets of paper to the Liberals—[Hon. Members: "You always apologise."] Well, I will apologise, but it did enable the hon. Gentleman to jot down today's Liberal party policy. Rather like the Conservatives, he overlooks the fact that over the past few years we have established a strong and stable economy, which will enable us to deal with the uncertainty that we face today. As I have said to the House and as I said last week, the reason we have adjusted our growth figures is that it is sensible in the light of what people are saying—that the uncertainty will have an effect not just here but across the world—to do that.
	If I understood the hon. Gentleman correctly, I agree with him that there ought to be more fixed-rate mortgages. Indeed, I said that during my statement and I said it just a few weeks ago. I would like people to be able to fix their mortgage rates for a lot longer, not just because that would be good for them, but because it would be good for the country as a whole.
	I am not sure that I follow the hon. Gentleman's point in relation to the Department of Health. We have been able to increase the amount of money being spent on health over the past few years. There is a further 4 per cent. real-terms increase, which will enable us not only to build more hospitals and provide new GP practices, but to provide health check-ups for individuals, which is important. It has never been clear to me whether the Liberals want to spend more on health or less—it really depends on what day we are listening to them. What I do know, having looked at the Liberals' proposals on tax, which cost around £18 billion a year, is that it is not clear where they are going to get the money from even to finance a small part of what we believe is necessary in public services.
	The hon. Gentleman talks about poverty. I strongly believe that we need to do more to reduce pensioner poverty and child poverty. Today I announced proposals to take another 100,000 children out of poverty. However, the Liberals' proposals on income tax would actually disproportionately benefit people with higher incomes, so I do not think that he is in a particularly strong position to lecture us on that.
	As I said at the last Treasury Question Time, there are problems in the administration of tax credits. However, the hon. Gentleman should not lose sight of the fact that more than 6 million families have benefited from tax credits. I believe that the policy of helping people on low incomes is absolutely right, which is why I intend to stick with it.

John McFall: I welcome the measures that the Chancellor has announced on simplifying the tax system, particularly on corporation tax and capital gains tax, and on fairness in private equity. As he knows, the Treasury Committee looked at the issue. We had practitioners from the industry lining up to say that it was terribly unfair for millionaires to pay less tax than their cleaners, so the steps that the Chancellor has announced today are welcome.
	However, does my right hon. Friend agree that if we are to continue to enjoy prosperity in this country, we need economic stability? In that context, the Governor of the Bank of England mentioned that the UK's economic fundamentals were there when he appeared before our Committee, while the Organisation for Economic Co-operation and Development has praised the UK's monetary and fiscal framework. Will the Chancellor give a guarantee that any tax initiatives that he has announced today have been costed and can be funded in the long term? Otherwise, the chickens will come home to roost sooner than people expect.

Alistair Darling: I agree with my right hon. Friend. As the Chairman of the Treasury Committee, he knows a great deal about the subject. In particular, he knows that it is essential that the Government stick to the position that they have followed over the past few years. It was our strength and stability that meant that we dealt with the problems that arose after the collapse of the Asian stock market in the 1990s and of the American stock market in the early part of this decade. We have been able to do that precisely because we have not made promises on tax and spending that cannot be financed. As I said earlier, it is striking that the shadow Chancellor made little attempt to defend his position or to explain how he would fill that black hole.
	In relation to spending, as my right hon. Friend the Member for West Dunbartonshire (John McFall) has said, it is important that we maintain expenditure where it will benefit the country in the long term. I understand that a Conservative Front Bench spokesman has already been on the radio failing to say that he would match us in spending that additional £2 billion on health and education.

Kenneth Clarke: The Chancellor has acknowledged that we are going to have a very sharp slowdown of the economy at the end of a period in which a sea of household and Government debt has sustained growth so far. Does he not therefore accept that people will be looking to today's statement to see whether he can restore confidence in the Government's fiscal policy through what might be a very difficult phase for our economy? Does he not think that he should have introduced some new fiscal rules to replace the two discredited fiscal rules of his predecessor? Does he not also think that it was a mistake to start playing around with the dates of the cycle as he did, so as to pretend that either of those rules was remotely credible? Does he not think that, when he announces that he is obliged to halve the rate of growth in public spending, compared with the rate that we have experienced for the past six or seven years, such an announcement should be combined with measures to indicate how reform can be accelerated, productivity improved and choice and competition actually delivered, in order to get a better quality of service for the money? With respect, his statement was devoid of any such measures. So far as he was concerned, this was the end of the party conference season. Does he not acknowledge that he will have to do some serious work over the winter if he is to retain even the modest levels of economic growth that he announced?

Alistair Darling: I seem to remember that the levels of debt that we have today are rather better than those that existed when the right hon. and learned Gentleman was Chancellor of the Exchequer. In relation to spending, I think that he was complaining that we were not spending enough, yet I had always understood that his party's position was that we were spending too much. The amounts of money that we are spending on public services such as health and education are considerably more than was the case 10 years ago when he was Chancellor of the Exchequer, as he well knows.
	In relation to the revision to the growth figures that I have given, I believe that it is sensible to do that because of what is happening internationally. The problems that started in the American housing market have clearly spread across the world. I made the point earlier that we need to take account of that, although, given the strength of the British economy, there is every reason to believe that we can get back on track with growth in the years after that—that view is shared not only by me but by independent commentators—because our economy is fundamentally strong, and it can deal with these difficulties. That is a rather different position from that of the Conservative party in the early 1990s.

Rob Marris: I welcome the continued stability and growth outlined in the pre-Budget report. I want to ask my right hon. Friend about Northern Rock and the financial assistance scheme. When Northern Rock was in difficulty, the Chancellor rightly stepped in and made the state the insurer of last resort. The Government have consistently said that they will not do that in relation to the 125,000 pensioners who will benefit from the financial assistance scheme—set up, uniquely, by this Government—but not at a rate of 100 per cent. I did not notice anything in the statement today to suggest that the Government had changed their position on this and made themselves the insurer of last resort for those pensioners—in whose case there was an adverse ombudsman's finding—as they did in the case of Northern Rock, in which there was no such finding.

Alistair Darling: I am sure that we will have an opportunity to discuss Northern Rock later in the week. The reason why I agreed that the Bank of England could provide lender of last resort facilities to Northern Rock was that I was concerned that damage might be done to the banking system as a whole. That is the only ground for intervention—a fear of systemic failure. It is not the policy of the Government or the Bank of England to intervene unless there is a risk that something that is happening in one bank will spread to other banks. That is why we intervened, and to that extent the case is quite different from that of any company in another sector.
	In relation to the financial assistance scheme, my hon. Friend will recall that we gave an undertaking in July to bring the support up to 90 per cent., if we can do that, and I hope that we will be in a position to say something about that in the not too distant future.

Michael Fallon: Given that the Chancellor's predecessor consistently overestimated corporation tax receipts and ended up having to borrow £100 billion more over the last five years than was originally forecast, what assurance can the right hon. Gentleman give that his revenue and borrowing figures are any more robust than his predecessor's?

Alistair Darling: Just a few moments ago, the hon. Member for Tatton (Mr. Osborne), who is continuing his huddle on the Front Bench, was criticising me for taking the necessary steps to ensure that I had made the necessary provision. I say two things in response. First, I want to ensure that we maintain a strong economy, which will help the financial health of companies and enable them to contribute through the tax system. I want to ensure that this is a good place to do business so that we can continue to attract more companies here, which we have been remarkably successful in doing. Secondly, as I said at the start of my statement, I have taken a prudent approach to the economy in order to ensure that we can support the economy as a whole. What we do fiscally must be the right thing to do in the light of present circumstances.

George Howarth: I warmly welcome my right hon. Friend's announcement on the increase in supply of housing for sale, which will be greatly welcomed, particularly by young families just starting out in life. Will he confirm whether there will also be an increase in the supply of social rented housing?

Alistair Darling: I know that my right hon. Friend has long been concerned that that should happen. I hope that, with the additional money that we can make available, we will be able to improve the stock when it comes to new build or renovation of affordable housing. It is important that the supply of housing and the housing market should reflect the differing needs of people in this country. Most of us are concerned about the difficulties faced by people on lower incomes. There are two sides to dealing with the problem. We look to see what we can do to help generally, but the key is to get more affordable housing into the market. That means money, and we are prepared to provide it, but it also means reform of the planning system, for which I hope we will gain all-party support.

George Young: Does the Chancellor accept that the NHS, for which the Government have responsibility, has consistently done better than social services, for which local government has responsibility? Will he confirm that he has done the same today? Does he recognise that local authorities are now spending billions more than their formula spending assessments on social services and are increasingly having to ration care and introduce charges? Would it not have been preferable, if we want to take some of the pressure off council tax, if we believe in joined-up government, and if we want to spend effectively on individuals, to have a better balance between health and social services?

Alistair Darling: I agree with the right hon. Gentleman. It is important to ensure that social services are properly funded. In my statement I announced a number of measures to help elderly people in particular, and also those with disabilities. We have increased the amount of money going to local government. It is obviously for individual councils to decide how they allocate that money. I believe that we have provided resources, through the health service and local government, to enable councils and others to make improvements to provide the care that we all want to see.

Sally Keeble: May I ask my right hon. Friend a bit more about his welcome announcement of increased spending on law and order, especially on local police budgets and local police teams? What would that mean in terms of the number of officers? Many people, including those in my own area, want to see more armed officers— [Interruption]—sorry, I mean uniformed officers, out on the streets.

Alistair Darling: I agree that we all want more uniformed officers on the streets, and I know that my hon. Friend has been vigilant in ensuring that the Government live up to their promises in that respect. We have made additional money available to the Home Office, but it is obviously for chief constables to decide how best to employ that money. I hope that by making this additional money available, we can ensure that police officers are placed where and when they are needed. I hope that the chief constable in my hon. Friend's area recognises the additional funds invested and uses them to place the right number of officers where they are needed to police the streets.

Phil Willis: I warmly welcome the £1.7 billion for the full implementation of the Cooksey reforms, but can the Chancellor confirm that the increase in resources by 2011 will not be at the expense of the Medical Research Council and basic research, and that resources for NHS clinical research will grow at the same rate?

Alistair Darling: I am grateful for what the hon. Gentleman has said. Over the past few weeks—and, indeed, in my previous capacity as Secretary of State for Trade and Industry—I have been struck by how advanced many developments are in this country, and the collaboration between universities and the health service is something that I want to encourage. The Prime Minister and I were at University college London this morning, and saw an excellent example of the way in which such collaboration is producing treatments and diagnostic skills that simply were not there just a few years ago. It is not only cutting the amount of time for which patients have to be in hospital to receive their treatment, but enabling more effective treatment to be provided. Yes, the Cooksey budget was identified as being a separate budget, and I think it very important for that to be the case. Sir David spent a great deal of time looking into the issue, and I was determined to ensure that he was given the funds that he needed.

Tom Clarke: Rather disturbingly, neither Opposition Front-Bench spokesman sought to match the Chancellor's excellent achievements, or his projections on overseas aid to help some of the world's poorest people in the world's poorest countries. Does the Chancellor agree that when the Government achieve the figure of 0.7 per cent. of gross national income by 2014—as I believe they will—it will be consistent with our millennium development goals, and that when the Government achieve it, as some Scandinavian countries already have, it will not be beyond their horizons to build even on that?

Alistair Darling: For many years, in the House and outside, my right hon. Friend has campaigned for an increase in the amount that we contribute to overseas aid. I remember wondering years ago—before I was in the House, and during my first 10 years here—whether we would ever be able to get back on track to meet our international obligations. Now we are back on track, and have been able to bring forward the date for our commitment of 0.7 per cent. of gross domestic product.
	As my right hon. Friend knows, the Prime Minister and his predecessor spent a great deal of time at Gleneagles securing international agreement and persuading all countries to join us. I am absolutely committed to meeting our international obligations. I only hope that there is cross-party support for that—although I am bound to say that, given their spending commitments, it is not clear to me how on earth the Opposition could possibly meet them.

John Butterfill: Do the Chancellor's estimates for public sector debt in total include the liabilities of private finance initiative and public-private partnership schemes? If they do not, can he tell us what the figure would be if they did?

Alistair Darling: I think the hon. Gentleman will find all that spelt out in the pre-Budget report that I have published today. As for whether PFI projects are classified as being on or off the Government's balance sheet, that is a matter for the Office for National Statistics.

Neil Turner: I congratulate my right hon. Friend on finding money to put into health and education rather than giving tax cuts to the extremely wealthy, but despite the excellent progress we have made, inequalities still exist in our country. Will my right hon. Friend use his position to ensure that the greatest proportion of the additional money that he gives to the Department of Health and the Department for Communities and Local Government goes to the areas with the most inequalities?

Alistair Darling: I very much hope that we shall continue to reduce those inequalities in all that we do, whether in local government or in the health service. It is important that we in central Government do our bit. That is why I said to the hon. Member for Twickenham (Dr. Cable) that although we clearly have difficulties to overcome with tax credits, they are clearly a very good way of putting money into the pockets of families who need that help.
	It is sometimes forgotten that there is another big thing we can do to deal with inequalities. As my hon. Friend knows full well from the area that he represents, getting people into work makes a massive difference to their prospects. I worry about the Opposition's proposals and the instability that they would create, because the inevitable result would be that, sooner or later, unemployment would go up. That has happened in the past, and we do not want it to happen again.

Sammy Wilson: The gloom that was evident on the faces of the Members behind the Chancellor today when he talked about the pre-Budget report will be reflected in Northern Ireland. It is predicted that growth will fall by 50 per cent and that growth in public expenditure in Northern Ireland will be 1.2 per cent, as against the 1.9 per cent. generally that is announced in the report. That will have an impact on the economy. In light of that, will the Chancellor consider proposals to change fiscal policies, for example, in Northern Ireland, which will help the Northern Ireland Executive to grow the private economy to fill the gap left by the reduction in public spending?

Alistair Darling: Perhaps I could make a general point to the hon. Gentleman, which I might equally make to the Welsh and Scottish nationalists— [Interruption]—well, I certainly see a Scottish nationalist— [Interruption.] Two of them, indeed. The devolved Administrations all have their Barnett entitlement in full. There have been no changes to the basis on which that is calculated. They get the money as they always have done. However, that is not the whole story, because money spent nationally on, for example, tax credits, pensions and defence is also money that is spent in Scotland, Wales and Northern Ireland.
	On the particular point that the hon. Gentleman made, I strongly agree that we need to encourage more private sector investment in Northern Ireland. I am sure that he will agree that at the moment public sector investment and public sector spending in Northern Ireland is disproportionate; it is much higher than any of us would like. He will also know that we asked Sir David Varney, who has been working on his report, to look at those things. However, a lot of things in Northern Ireland need to be looked at to encourage investment. One in particular is education and skills. When we ask business people in Northern Ireland what they want, they say that they want to ensure that when they set up businesses, they have the work force with the necessary skills, as well as investment, infrastructure and other factors.

Paddy Tipping: Will the Chancellor confirm that he can afford free health checks, better health and a better future for the many by resisting the temptation to go back to the past by offering unsustainable tax thresholds for inheritance tax for the very few?

Alistair Darling: My hon. Friend makes a good point. Free health checks for people are a very good policy. I am sure we can all think of individuals who are alive today who might not have been if they had not happened to go to the doctor for a check-up. Doing that as a matter of routine seems to be eminently sensible, not just for them but for the good of the country as a whole. There is no doubt that if a party gets itself into a position where it promises to cut taxes by £5 billion and it has no idea where to get the money, sooner or later it will find that it cannot pay for the health service, education or anything else.

Edward Leigh: Why was more not made today of efficiency gains? Since 2001, the Public Accounts Committee has made some 2,500 recommendations in more than 300 unanimous reports. Most of those recommendations have been accepted by the Government, but many of the lessons are not being applied across Whitehall. In the light of the sheer size of the Government budget, does the Chancellor accept that an efficiency gain of just 2 per cent. in the use of resources would generate £8 billion-worth of savings every year? That would be enough to lead not only to increased spending on priority areas, but to a real reduction in the overall burden of taxation. Finally, does he agree that any Government or party that promised to return to the people a share in the proceeds of growth as well as a share in the proceeds of efficiency would be on to an election winner?

Alistair Darling: It is funny that the hon. Gentleman should say that, because at the last election the Conservatives said that they could get lots of savings out of paperclips, and it did not turn out to be the election winner that they thought it might be. When we started to look at what was being proposed, we found, just as we are finding now, that one did not have to look too far to see that promises were being made on the basis of money that had not yet been saved. That way lies the very instability that I have talked about.
	On the hon. Gentleman's more serious point, I agree that Government can always be more efficient. I said in my statement that our review identified £30 billion-worth of savings, which Departments will have to accomplish because if they want to meet the spending that they have set out they will have to find that efficiency saving. Following the Gershon report, £20 billion has already been saved; I have not the slightest doubt that all Government Departments, and the public sector generally, can always do more, and the pressure that the hon. Gentleman's Select Committee brings to bear on Departments in this regard is useful.

Mark Durkan: Will the Chancellor confirm—so that I can welcome the fact—that the new improved child element of child tax credit will benefit some 130,000 families in Northern Ireland? On the wider issues, did an earlier answer that he gave indicate that in spite of significantly improved allocations to health, education and social housing, there will not be any translated increase in the Barnett allocation to Northern Ireland beyond what the Chancellor's predecessor promised to the Northern Ireland parties back in the spring?
	I welcome again the Government's reaffirmed commitments on official development assistance. Will the Chancellor confirm that they will hold, no matter what the uncertainty brings, and will he colour in what that means in terms of the Department for International Development's budget for education and the fight against AIDS, tuberculosis and malaria?

Alistair Darling: I am happy to hear a slightly different view from Northern Ireland in relation to Government expenditure, because increasing expenditure for Northern Ireland to £10 billion is very good for Northern Ireland. I can also tell my hon. Friend that, of course, the money that I announced to help us meet our target of getting 100,000 children out of poverty covers children in Northern Ireland—as it does children in the rest of the United Kingdom. I am sure that the tax credit increase will be welcomed by many families living in Northern Ireland, and my hon. Friend is right to welcome that.
	My hon. Friend is also right to welcome the increase in the money that DFID will receive for overseas aid. However, the allocation within the Department is a matter for my right hon. Friend the Secretary of State for International Development, who will no doubt want to make further announcements in due course.
	My hon. Friend highlights the fact that we have been able to make and confirm such allocations. We know that we will be able to deliver on them, because we have been running the economy and not making uncosted and irresponsible promises. Being unwilling to play to the gallery can at times be unpopular, but it is the right thing to do in the long-term interests of this country.

Stewart Hosie: The Chancellor confirmed a number of things today, such as that the growth rate will fall and borrowing will remain high at about £30 billion. However, he failed to confirm that 75 per cent. of his PFI liability was off balance sheet—hiding the numbers—and he did not tell us what research and development spending was this year. Instead, he said there would be another report, which I will look at with some interest. However, we know that R and D spending for the future has been lamentable. Nor did he tell us, although it has been published, that the balance of trade deficit is some £45 billion—a direct consequence of the 1 million lost manufacturing jobs.
	The Chancellor did, however, tell us two things, and I have questions about those. He spoke about Crossrail and the Olympics. There will be Government funding of at least £5 billion for each of those projects. Will he confirm that that will be subject to the Barnett formula? He also said that the Scottish departmental expenditure limit would rise to £30 billion by 2010. That would appear to amount to a 1.4 per cent. annual rise for each of the three years, but can he confirm that, with the shaving of more than £300 million off the Scottish baseline figure, that amounts in real terms to barely a 0.5 per cent. rise for each of the next three years? If that is the case, when his own report states that
	"oil prices have risen above consensus forecasts"
	because of factors such as "resilient demand", and oil revenues are flooding into the Treasury, is it not shameful that a mere trickle of barely a 0.5 per cent. rise in real terms is returning to Scotland?

Alistair Darling: Let me respond to the various points the hon. Gentleman makes. First, most people might think that an increase of the budget in Scotland to £30 billion was not only the right thing to do, but that it also provided the Scottish Executive—even one currently led by somebody whose ambitions far exceed his ability to deliver them—with sufficient resources to spend on health, education, transport and many of the other things that Scotland needs. Scotland got its full share of Barnett expenditure; absolutely nothing has changed in relation to that. That means, for example, that Scotland—as well as Wales and Northern Ireland—also got its Barnett share of the expenditure on Crossrail. Although Crossrail is largely a railway line and tunnel in the middle of London, Scotland got the Barnett consequentials of it.
	I would have thought that the nationalists—whose own policy would mean that the sums would not be available, because of all the disruption that would be caused to Scotland by tearing it away from the rest of the United Kingdom—would be able to see that, on any view, the settlement is very good, especially when they consider the amount of public spending per head of population in Scotland compared with that in the rest of the United Kingdom.
	I shall say one other thing. As an Edinburgh MP, I follow closely what is happening in the Scottish Executive. It is increasingly clear to me that the reason why the nationalists are blustering and complaining so much is that they cannot afford, and are not able to deliver on, the promises that they made earlier this year.

Ann Cryer: Can my right hon. Friend comment on the plight of some of my constituents who are former council house tenants? They are having the greatest difficulty in getting the trust to do any repairs or improvements to their properties. Is there anything in the report that might help those constituents?

Alistair Darling: There is certainly more funding available, and I have made a change to the treatment of repairs for VAT purposes. However, if my hon. Friend sees me or drops me a note, I shall be interested to learn from her what the particular problem is. It may be a problem with money in the past, or some other problem. We have certainly made money available overall; perhaps the change in relation to VAT that I have made today will help.

John Redwood: Can the Chancellor tell us the current total borrowing figure for the public sector, adding in all the off balance sheet obligations under PFI/PPP, the guaranteed loans in parts of the public sector and the unfunded pension liabilities? I know that he is a strong admirer of transparency, and expects such accounting from the private sector.

Alistair Darling: As I said earlier, borrowing this year is lower than we expected. On public expenditure generally, and borrowing and PFI, the borrowing figures are set out in the Red Book, as I said. However, I wonder about this: one of the things that I thought good about the report that the right hon. Gentleman commissioned for his leader was his commitment to the necessary public investment in transport, for example.
	We can deliver on our commitments, not only for transport but for health and education, only because we have been prepared to finance that partly directly by Government and partly through PFI. I have never understood the enthusiasm of Conservative Members who speak about PFI as if they wanted to see it end. I think that both that investment and the way in which we have financed it are absolutely justified; otherwise, we would never get the investment that the right hon. Gentleman himself called for in his report.

Adrian Bailey: Does my right hon. Friend agree that the resilience of the British economy in the face of international problems, such as when the dotcom bubble burst a few years back, the soaring prices of oil and raw materials and, more latterly, the collapse of the sub-prime market in the USA, is due in no small part to sound public finances and the robust economic model that the Treasury has pursued in this country? Will my right hon. Friend undertake to ensure that that is maintained as a priority? Secondly, in light of the additional investment being put into our public services in spite of the international difficulties, will he ensure that we also look at productivity gains to add value to the extra money that we are still able to put in?

Alistair Darling: I agree with my hon. Friend that it is important to increase productivity in both the private and the public sector, and that the expenditure that I have been able to announce today is possible only because we can pay for it. We can do that because we have been careful to balance what we promise to spend with the money that we think that we can gather in—something that cannot be said of the Opposition.

Julian Brazier: The Chancellor tells the House that the economy is sound, but will he remind us of the last time the savings ratio was so low? In how many other European countries is household indebtedness at British levels, and in which other countries has there been a run on a bank recently?

Alistair Darling: I am sure that the hon. Gentleman knows that, both here and in other countries, the savings ratio falls when the economy is growing and inflation is low—but that is not to say that we do not need to do more to encourage people to save more. As for personal debt, it is true that some people have borrowed quite a lot of money to finance things, but the overall level of household assets exceeds the level of indebtedness by a considerable margin. Finally, on the subject of the strength and resilience of our economy, I think that the hon. Member for Canterbury (Mr. Brazier) will find that our economy is much stronger and more resilient now than it was when he was sitting on the Government side of the House.

Point of Order

William Cash: On a point of order, Madam Deputy Speaker. During Foreign Office questions, the Foreign Secretary said that he had placed papers in the Library—and also in the offices of the European Scrutiny Committee and the Foreign Affairs Committee—that supposedly gave sustenance to his argument that the so-called red lines have remained as the Government interprets them. However, I have made inquiries of all the offices involved and have discovered that no such text has been received. Furthermore, even though the Foreign Affairs Committee is sitting tomorrow, there is no indication that the Government's assertions—which run contrary to yesterday's report from the European Scrutiny Committee—have been justified by any legal experts, whether external or otherwise.

Madam Deputy Speaker: The hon. Gentleman is an experienced Member of the House, and will no doubt know what I am about to say—that that is not a point of order for the Chair. However, his remarks will have been heard on the Treasury Bench, and I shall certainly make sure that some inquiries are made.

Ports (Regulation)

Anne Moffat: I beg to move,
	That leave be given to bring in a Bill to regulate the activities which can be undertaken in UK ports; to place certain duties on harbour authorities; and for connected purposes.
	Colleagues will know that this is certainly a complex issue. I have raised it in the House on many occasions, but it has become increasingly clear that UK regulations that comply with the habitats directive need to be put in place. Under such regulations, the implications—and, if necessary, the public-interest arguments—of the firth of Forth scheme and similar proposals could be fully considered.
	The seas around the UK currently have no legal protection. That means that some of Scotland's most precious wildlife, from sea birds to seahorses, is at risk from human impacts such as shipping, marine developments, fishing and pollution. Currently, 85 different pieces of legislation govern activities in Scotland's seas. That legislation needs to be consolidated and brought up to date if we are to protect our marine wildlife and our coastal communities.
	In my constituency, the biggest threat at present is the proposal to allow ship-to-ship oil transfers in the firth of Forth, and my Bill is designed to address the lack of any appropriate regulation or framework. At present, ship-to-ship oil transfers can be carried out within a harbour authority area if that harbour authority has in place an approved oil spill contingency plan that covers such activities. The underlying principle is that ship-to-ship transfers in harbour authority areas should take place only where there is a fully worked-up oil spill contingency plan, with trained personnel—and the necessary equipment for responding to a spill—close at hand.
	Many hon. Members will know that my constituency of East Lothian has one of the finest coastlines in the UK. It attracts 2.5 million visitors every year, with all the obvious advantages for local communities, including the employment of up to 3,500 people in the tourist industry. The coastline stretches from Cockburnspath north to Musselburgh, and its beauty is valued by locals and visitors alike. The coastline also has nine designated bathing waters from Seton Sands down to Thornton loch, and anyone travelling on the east coast main line will see its breathtaking beauty at first hand.
	The East Lothian coastline is one of outstanding natural heritage. Ninety per cent. of the coastline is classified as a Forth special protection area. Over the recess, I have collated evidence from across the constituency of the determination of my constituents to oppose the proposal. I have a petition with hundreds of signatures; I have thousands of postcards that constituents have signed and returned confirming that they wish me to oppose the proposal, which would see 7.8 million tonnes of crude oil transferred in the firth of Forth.
	My constituents and I do not wish to consider the consequences of an oil spill in our beautiful waters, whether there are contingency plans in place or not. In recent years, public money has delivered major improvements to the coastline and beaches of East Lothian, and that investment should never be put at risk. Hon. Members might ask whether there is a genuine risk from the proposal for ship-to-ship transfer of oil. The answer is absolutely yes. The potential hazards include oil spills, vessel collision, fire and explosion, environmental emissions, damage to coastal and sea bed habitats, damage to tourism and damage to fishing. It is an accident waiting to happen. I, for one, do not want to trust and hope that, if such an oil spill were to occur in the firth of Forth, the contingency plans would preserve the integrity of the coastline and nature conservation sites. I am introducing this ten-minute Bill because I remain of the view that the current legislation has the balance right between protecting the environment and allowing the port authorities to facilitate commercial and economic activity.
	There is some provision to regulate and, if necessary, prevent ship-to-ship transfers in the Forth. Those functions are vested in Forth Ports, which has power under byelaws enacted under local legislation to regulate whether vessels can anchor to transfer cargo. As a competent port authority under the Conservation (Natural Habitats, &c.) Regulations 1994, Forth Ports must have regard to the requirements of the habitats directive. The amendments to the habitats regulations in Scotland are very good, and adequate to deal with the European wildlife sites dimension of projects in the Forth. They were passed with all-party support in the Scottish Parliament. The detailed process for consent to plans and projects set out by the current regulations does not deal specifically with, or apply to, oil transfers, however. Unlike other types of port development, programmes of ship-to-ship transfers are not subject to environmental impact assessment regulations either in Scotland or in the rest of the UK, regardless of their frequency or volume.
	The missing link in the legislative framework is a sensible set of UK regulations controlling ship-to-ship transfers in UK waters. The absence of clear national consenting mechanisms for marine plans or projects and for ship-to-ship cargo transfers in particular has led the firth of Forth to a highly unsatisfactory default position. The consent for a major oil handling project must be determined by the board of directors of a public limited company, the share price of which seems inevitably to be affected by that decision. That seems an invidious position for Forth Ports plc. Meanwhile, UK and Scottish Ministers have no power of veto. Ship-to-ship transfer as an activity slips through the net and the public are denied a voice.
	No wonder there exists a widely and strongly held perception of a conflict of interest on the part of statutory harbour authorities when they are also by nature public limited companies with duties to their shareholders. Surely this is at odds with the need for impartial regulation and with the spirit, if not the letter, of the habitats regulations.
	In East Lothian, for instance, there is a perception of a reluctance on the part of the harbour authority to address the legitimate concerns of local communities and others, and that has resulted in an unfortunate amount of mistrust and ill feeling. The mistrust is exacerbated by the difficulty experienced by members of the public in gaining access to environmental information gathered by the harbour authority. This fuels accusations of secrecy and questions the impartiality of the harbour authority. How can a body that may benefit financially from granting consent be seen to regulate the activity transparently and without prejudice? These issues could be addressed by incorporating into new regulations for ship-to-ship transfers a clear process to be followed by harbour authorities. The authority to consider that falls wholly within Westminster.
	The Bill seeks, by regulating the activities that can be undertaken in UK ports, the provision for transfers to be prohibited or consented to only subject to strict conditions. Regulation of the activities that can be undertaken in UK ports under the Bill should avoid the potential conflicts of interest for bodies that currently act both as the competent authorities and the financial beneficiaries of such transfers. The Bill would ensure that harbour authorities are more clearly accountable to the public for their environmental responsibilities and in carrying out their statutory functions. The decision-making process in relation to ports' development is complex and often less than transparent. There must be scope for simplification and regulation in particular if the habitats directive does not fully meet the requirement to protect our waters from the impact of such proposals.
	A common approach from the Government and the devolved Administration to work with the industry and other interested parties to simplify and rationalise the procedures is now required. Successive Governments have sought to separate regulation from those with a commercial interest in consents. For example, the water industry is regulated by the Scottish Environment Protection Agency and the forestry industry by the Forestry Commission, and town and country planning proposals in which the local planning authority stands to benefit may be called in by Ministers.
	The Bill seeks to ensure that clear habitats directive compliant procedures are followed by harbour authorities in consenting to ship-to-ship proposals and would give call-in power to Ministers to avoid apparent conflicts of interests.
	 Question put and agreed to.
	Bill ordered to be brought in by Anne Moffat, Jim Sheridan, Mr. Jim McGovern, Mr. David Hamilton, Mr. John MacDougall, Mr. David Anderson, Mark Lazarowicz, Mr. Jim Devine, Dr. Gavin Strang and Nigel Griffiths.

Ports (regulation)

Anne Moffat accordingly presented a Bill to regulate the activities which can be undertaken in UK ports; to place certain duties on harbour authorities; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 19 October, and to be printed [Bill 154].

Defence Procurement

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Michael Foster.]

Bob Ainsworth: I am pleased to open this debate—my first as the Minister of State for the Armed Forces. It is a fantastic privilege to be given the opportunity to associate with, and to serve, the men and women who defend our nation. During my now three months in office, I have met many of them both at home and abroad, including in Iraq and Afghanistan, and I have heard first hand their views about their equipment and the way in which it is supported. Everywhere that I have been, I have been immensely impressed and inspired by their dedication and bravery and by the professionalism of our personnel. Although the debate is about procurement, the House need not be told that our equipment is only as good as the people who use it and that those people still make the difference. We are very fortunate to have the people that we have in our armed forces.

Bill Wiggin: Will the Minister give way?

Bob Ainsworth: If the hon. Gentleman will give me just a moment. I have not spoken in the House for four years given the position that I had and I have been speaking for about 40 seconds, but he is trying to intervene already. If he allows me a bit of scope, I will give way to one or two Members in a little while.
	The House knows that direct responsibility for defence acquisition lies with my noble Friend the Minister for Defence Equipment and Support and I should like to pay tribute to the tremendous commitment that he has brought to the role. In December 2005, he launched the defence industrial strategy. It has been a success. For the first time, it provides a framework for how the Government and industry together should meet the needs of the front line.
	The strategy set a challenge to the Ministry of Defence. It has driven change within the Department, not least through the merger of the Defence Logistics Organisation and the Defence Procurement Agency into Defence Equipment and Support earlier this year. That new organisation provides a unified approach to our procurement and support functions. It will deliver better value and greater effectiveness for the £16 billion that we spend each year. The defence industrial strategy also set industry a challenge to transform itself. A good example of how industry is rising to that challenge is shown in VT and BAE Systems; they are forming a joint venture for future shipbuilding and support.

Ian Davidson: Will the Minister give way on that point?

Bob Ainsworth: I will give way in a moment, perhaps even to my hon. Friend.
	I have seen the effect that the strategy has had further down the supply network. NP Aerospace in my constituency in Coventry puts together the Mastiff-protected vehicle and supplies life-saving body armour for our troops. We ask a lot from industry, particularly from small firms such as NP Aerospace. We want them to embrace change, and to be innovative and flexible. In turn, we need to understand the problems that they face, to be as clear as possible about what we need, to provide reassurance and to understand their concerns. When, by taking risks, they deliver on our requirements, we must reward them for taking those risks.

Bill Wiggin: What discussions has the Minister had with the Department for Environment, Food and Rural Affairs about increasing from just 3 per cent. the amount of British lamb that our forces are allowed to eat? Is he not aware that lamb prices are at rock bottom because of Government policy on foot and mouth and the crisis that it created? Introducing more British lamb through the procurement process would be good for the taxpayer, good for the farmers on whose land our troops train and, most of all, good for our troops, because British lamb is so delicious.

Bob Ainsworth: The hon. Gentleman raises a fair point. I have not looked into that—there were one or two other things going on over the summer—but I will do so. I will talk about it and see whether we ought to address that point.

Ian Davidson: rose—

Bob Ainsworth: I give way to my hon. Friend.

Ian Davidson: I have waited four years and five minutes to intervene on the Minister, and I thank him for giving way. May I say how grateful my constituency and I are for the award of the aircraft carrier some months ago? However, I want him to clarify what exactly he has done for me recently, because it is rumoured that the MARS—military afloat reach and sustainability—contract will be offered for award outside the United Kingdom through the  Official Journal of the European Union . That would allow external suppliers to bid, and it would disrupt the relationship that has been agreed with industry on shipbuilding. It would also destroy the relationship with the supply chain that the defence industrial strategy has been so keen to build. In the second intervention that the Minister has taken in four years, will he agree to reverse Government policy on that matter?

Bob Ainsworth: My hon. Friend knows that he and I have had one or two conversations over the past four years, even if they have not taken place at the Dispatch Box. I have tried to do him many favours, but he has never really appreciated what I have tried to do for him over that period. There is no thanks from him; he gets an aircraft carrier, and within a couple of months he is complaining that he wants something else. The MARS project is still in the development stage. It is too early to make the accusations that he makes. He knows that we are embarking on a huge shipbuilding project in the coming years, and his constituency will be heavily involved in that. MARS acquisition has to fit into that and into the thinking. My noble Friend the Minister for Defence Equipment and Support will look into the matter and will be prepared to talk to people, possibly even to my hon. Friend, about that proposal.

Lindsay Hoyle: My right hon. Friend is generous in accepting so many interventions early in his speech. I thank him for his commitment on the two aircraft carriers. We must thank the Government for that commitment, as it involves a huge amount of money, and it protects many yards. However, will he ensure that that is the biggest shipbuilding programme that we have seen, that help and assistance will be available, and that some of the work will go to the Vickers yard at Barrow? It is important that the BAE yard at Barrow receives a share of the work, and does not rely purely on money. Of course, we must touch on our favourite subject—what will operate from those two carriers, and the need to ensure that the North West Aerospace Alliance will benefit.

Bob Ainsworth: The aim of the defence industrial strategy is to look not only at the needs of our people but at the capability of our industry, and to do so strategically. I do not think that my hon. Friend need have any doubts about our desire to do exactly what he would want us to do, but we must look at how that fits in with the way in which we make progress and maintain capability and the skills base in the UK, as well as—and this is of primary importance—delivering first-class equipment to our people at the front. That is exactly what we are about and it is what we are trying to achieve.

David Laws: As the Minister appears to be soliciting thanks from some of us, may I thank him and Lord Drayson, who has ministerial responsibility for procurement, for coming to Yeovil a year ago and signing the first partnering agreement for the Future Lynx helicopter? Will he confirm that Future Lynx and the partnering concept will remain fundamental to his Department's strategy in future?

Bob Ainsworth: We are still working on the proposals, as the hon. Gentleman knows, and I hope that we can confirm exactly where we are with Future Lynx and the progress that has been made. I will keep the House informed about that over the coming months.

Ian Gibson: rose—

Bob Ainsworth: May I make some progress, having giving way a few times?
	Effective procurement needs strong front-line input, and I am pleased that military personnel, including those with recent operational experience, have a strong say in decisions on future and in-service equipment at all levels. We must listen to people who are on operations. During my visits, I heard a great deal of praise for the improvements in combat clothing, personal equipment and weapons such as the Javelin anti-armour missile. The new protected personnel vehicles such as Bulldog and Mastiff are particularly welcomed, as is the provision of Apache attack helicopters. As my right hon. Friend the Prime Minister announced yesterday in the House, we are going to place an order for an additional 140 Mastiff patrol vehicles. We are getting those improvements right, because we take the views of our people into account in deciding what to buy, using their knowledge to make sure that they get what they need, whether it is 360° vision for Mastiff, or fitting a machine gun to the side of a Lynx helicopter. While technology is a big help—and we must always exploit it—it does not, and it never will, have all the answers. It takes the brains of our people to give the equipment the extra edge. We must make absolutely certain that we input that knowledge at every stage in the procurement process.

Ann Winterton: The Minister will know that yesterday I welcomed the extra Mastiffs, which are extremely popular vehicles. If someone is on patrol, they would rather go out in one of those than in anything else. Now that that announcement has been made, when will the order be placed, what is the delivery date, and is the Ministry of Defence considering medium protected patrol vehicles as well, which are very much needed, particularly in Afghanistan? Will he give the House some information on that?

Bob Ainsworth: Later in my speech, I shall talk about the vehicles that we use. The hon. Lady is right to say that Mastiff is held in high regard by the people out in Afghanistan and Iraq, but it is not always the vehicle for the job. I am sure that she appreciates that there must be a range of vehicles suitable for all occasions and available for commanders to use as and when they need to do so. The additional Mastiffs, with those that we are already bringing on board, will help in that regard.

Ann Winterton: Will the right hon. Gentleman give way again?

Bob Ainsworth: I am coming to the subject of vehicles, and I am sure that the hon. Lady will want to intervene then.
	Nowhere is providing equipment for force protection more important than on the front line. Since the start of military operations in Iraq and Afghanistan, we have approved more than £1 billion for force protection equipment, from new helmets to better surveillance equipment and electronic counter-measures. Osprey body armour and the heavier Kestrel armour for more exposed tasks have helped to save lives in both Iraq and Afghanistan, but let me make the point that I have just made to the hon. Lady. I know that many in the House understand this, but others do not. Equipment alone can never provide full protection. Tactics and training are every bit as important as protective equipment in keeping our people alive and safe.
	A key part of force protection is providing the right battlefield mobility. In March, my right hon. Friend the Secretary of State for Defence announced that 14 more support helicopters are to be made available for operational theatres—eight Chinook mark 3 and six Merlins. We expect all six Merlins to be operational next year.

Ian Gibson: Will the Minister give way?

Bob Ainsworth: I shall give way again in a while, but may I make a little more progress?
	Much of the force protection equipment has been acquired through the urgent operational requirement—the UOR—process. This provides equipment to meet new and emerging threats, and for the particular environmental conditions of an operational theatre. Since 2003, we have spent more than £2 billion on UORs. All this money from the reserve is additional to the defence budget. One of the key strengths of the UOR process is its speed. For example, we were able to get Mastiff into service within 23 weeks of the decision to proceed.
	Other UORs include the new mobility weapons mounted installation kit—or M-WMIK—vehicles, being provided by Devonport Management Ltd, which will enter service early next year. The existing WMIK Land Rover has been a big success. The new vehicles, based on a new SUPACAT chassis, will be better still. They will have a longer range, more firepower, greater mobility and higher speed.
	I give way to my hon. Friend the Member for Norwich, North (Dr. Gibson).

Ian Gibson: I thank my right hon. Friend for giving way. Although I have expressed support for the capital investment and for paying the troops fighting the causes in Iraq and Afghanistan, with reference to the estimates published in spring and winter, does he consider that there is proper parliamentary scrutiny of and debate about that investment? Such debate could mean that more, rather than less, goes in, so one should not be frightened of an open debate about the matter. That would be welcome. Select Committees have been frustrated in the past about getting into the details of equipment such as he is describing. Welcome as what he says is, an overall picture would be much more gratifying.

Bob Ainsworth: I am not aware of a problem with the Defence Committee. I am new in the job and so far I have spoken to the Committee only about operations in Iraq. Procurement is not my direct responsibility, but that of my noble Friend the Minister for Defence Equipment and Support. The Defence Committee appears to do a thorough job. I hope members of the Committee will have the input and the opportunities that my hon. Friend expects them to have, in order to help us to get things right in the way that he describes.

Crispin Blunt: I belatedly congratulate the Minister on his appointment and on this debut. He made it clear that all the UOR funding is coming from the reserve, but when he talked about the protective equipment he said that more than £1 billion had been spent, much of it through the UOR scheme. The implication is that that which has not been acquired through the UOR scheme is coming out of the defence budget. Will he give us the figures? If he does not have them to hand, will he write to me?

Bob Ainsworth: I have given the hon. Gentleman the figures on UORs. He understands the process, because he is well versed in it and he follows defence issues. Of course, some force protection equipment has been provided on an ongoing basis through the defence budget. We are fighting in two theatres that are difficult not only because of the enemy and the tactics that need to be deployed to deal with it, but because of the weather. That obviously throws up issues that have not been anticipated, not because of any weakness in the defence procurement methodology but because the threat changes and the tactics change. On such occasions, the UOR process is ideal and essential so that we can manoeuvre and get more money into the system to meet the changing threat. That is where the two streams of money come together. Of course, some force protection is paid for through the core budget and a lot of it is provided, as and when it is needed, through the UOR process.
	Before I move off the issue of vehicles, I shall reply to the hon. Member for Congleton (Ann Winterton). We have set aside £100 million for the 140 extra Mastiffs announced by the Prime Minister. I anticipate that they will be deployed on operations within the next 18 months, but I cannot provide more concrete detail than that. We are still in the process of providing the vehicles that we are procuring. These vehicles will add to the end of the production line, and we obviously want to try to get them into theatre as quickly as possible.

Liam Fox: Just for clarification, the Minister says that money has been set aside, but has that been done as a UOR or as part of the core budget?

Bob Ainsworth: My right hon. Friend the Prime Minister is clear that this is money that we have set aside within the defence budget. [Hon. Members: "Ah."] Well, if hon. Members had listened, they would have heard the Prime Minister say that clearly. The original Mastiff requirement was a UOR in response to the need for a new protective vehicle. We have decided to provide this ongoing, additional tranche and we are able to provide it out of the defence budget.
	We are improving our surveillance capability through, for example, our acquisition of the Desert Hawk unmanned air vehicle, which is now operational. Such vehicles weigh less than 7 lb and provide imagery from high above the battlefield, which is making them popular with those who operate them. One individual from 57 Battery, Royal Artillery has said:
	"This is a unique piece of equipment which gives commanders the ability to see what is going on behind hills and buildings. That can change the course of a battle."
	Desert Hawk is complementing the larger Hermes 450 tactical unmanned aerial vehicle, which has recently begun operational flying, and the Reaper long-range, long-endurance unmanned aerial vehicle. The first UK Reaper arrived in theatre in Afghanistan a few days ago and its first operational mission will take place very soon. Despite the complexities, this capability has been achieved in only 15 months, thanks in no small part to co-operation from the US air force.
	These unmanned aerial vehicles join our existing assets such as Nimrod in sending real-time images routinely to commanders on the ground and will be used for a variety of tasks, including force protection, route clearance, base security and target tracking.

Michael Jack: Will the Minister confirm that the initial deployment of BAE Systems' high-endurance rapid technology insertion system—HERTI—has proved effective in demonstrating a UK-produced unmanned air vehicle capability?

Bob Ainsworth: That is true, but we need a range of vehicles to meet the requirements, and the demand from the front line must always come first. Obviously, where there is British-provided equipment with the right capability at the right price, we ought to take that approach, and that is what the defence industrial strategy seeks to achieve.
	Current operations are our priority, but we must also be alive to emerging and future threats and plan to meet them. Tomorrow's conflicts may be very different to those we face today. Looking back 10 years, our prime focus was on enforcing a fragile peace in the Balkans. Today we are committed in the dust and heat of Iraq and Afghanistan—10 years from now, who knows? However, taking new equipment from the drawing board into service can take many years, so we need to be thinking now about challenges we may face in 10 years or more and the equipment our forces will need to tackle those challenges.
	In July, my right hon. Friend the Prime Minister announced the spending settlement for defence. At the same time, we announced our intention to proceed with the purchase of two new large—65,000-tonne—aircraft carriers for the Royal Navy. Those ships have three times the displacement of our current carriers. They will bring a step change in our maritime capability and contribute to the biggest naval shipbuilding programme for over 20 years. The new carriers, to be named HMS Queen Elizabeth and HMS Prince of Wales, will be the largest vessels ever operated by the Royal Navy. They are expected to enter service in 2014 and 2016, and will be the most capable carrier force outside the USA, enabling us to deliver increased strategic power and influence around the world at a time and place of our choosing.
	The two biggest companies involved in the project—VT and BAE Systems—are to form a joint venture for future shipbuilding and support, to improve efficiency. The order for the carriers will be placed with an alliance of companies. The construction of the ships in blocks at shipyards in Govan, Barrow, Portsmouth and Rosyth is expected to create in the region of 10,000 jobs.

Julian Lewis: May I say to the Minister that we warmly welcome the announcement of the carriers? However, I remind him that the carriers were originally posited in the strategic defence review in 1998. The deal done with the Navy was that the total of frigates and destroyers would go down from 35 to 32. Later, as he knows, the number went down to 25, and it is now being suggested that it might go down further to 19 or 20. Will he confirm that the Navy is not being required to pay yet another price in terms of frigates and destroyers for the long-awaited carrier order?

Bob Ainsworth: In the years that the party that the hon. Gentleman supports was in power there were massive cuts of 36,000 Army personnel and a huge reduction in defence spending. If he is saying that the shipbuilding programme for the new carriers is not big enough, and that is to be taken seriously, he needs to tell us what his own party's programme is and what his party's spending would be. How much more would he spend on the Navy and the Army? I look forward to hearing him give those commitments. He sits on the Front Bench, not the Back Benches, and he cannot go around making such comments without saying what the alternative would be.

Julian Lewis: I shall tell the Minister very clearly what our policy is. Either we will fund new commitments that we enter into, such as going into wars, or we will not enter into those commitments. It is his Government who in 1998 set out the combination of 32 frigates and destroyers and two aircraft carriers. They then reduced that to 25 frigates and destroyers and two aircraft carriers. All I am asking is whether the Minister plans to reduce the figure further to 19 or 20 frigates and destroyers and two aircraft carriers. It is a simple yes or no question.

Bob Ainsworth: We have set a course for the biggest shipbuilding programme in history, providing the Navy with world capability for the future, and I note that the hon. Gentleman did not specify whether his party would spend more or less money.

Ian Davidson: Does my right hon. Friend acknowledge that the work would not come to east and west Scotland if that country was not still part of the United Kingdom? An independent Scotland would not build aircraft carriers.
	What steps is my right hon. Friend taking to ensure that not only the main blocks are built here but that, as far as possible, the sub-contract work and the supply chain is focused on the United Kingdom? Will we use the opportunities that the enormous order presents to maximise the training of local people? In my constituency, we would greatly regret it if the work, while going to British companies, had to be done by imported labour because we could not train our local labour. Will he ensure that the appropriate steps are taken?

Bob Ainsworth: I do not know what more I can say to my hon. Friend about our strategy and what we are trying to achieve to maintain the industrial and skills base in the country. That remains our desire and intention and we want to do everything possible to achieve it.
	I do not know who provoked my hon. Friend into making the point about Scotland, because there are no Scottish National party Members of Parliament present at the moment. However, he is right that such provision of equipment for the British Navy would not happen if the SNP got its way and managed to split the United Kingdom into its constituent parts.
	The carriers that we have ordered will be escorted by the new Type 45 destroyer. I visited the first of those—HMS Daring—during its sea trials off the west coast of Scotland and was immensely impressed by the power of the ship. The second of class—Dauntless—was launched in January this year and the third, Diamond, is due to be launched in November.
	The Type 45 will be one of the most capable air defence destroyers in the world, with the Samson radar enabling it to provide far more effective air defence for expeditionary task group operations. Higher engineering standards will reduce maintenance time and improve availability, so that fewer ships are required to perform the same number of tasks.
	The first of our new class of Astute nuclear attack submarines was launched in June. Armed with tactical Tomahawk cruise missiles and Spearfish torpedoes, it will be by far the most potent British attack submarine ever built. HMS Astute will enter service in 2009. Ambush and Artful, which are under construction at Barrow, will follow in 2010 and 2012. In May, we also signed an initial contract for the fourth boat, Audacious.

Bob Russell: Will the Minister give way?

Bob Ainsworth: Let me make a little progress. I have given way a lot and I do not want to hog the debate.
	Our largest future programme for the Army is the future rapid effect system—FRES. It will consist of a family of vehicles that have high levels of protection but which are capable of being transported by air, thus allowing troops to deploy rapidly across the globe. The first variant will be the utility vehicle, and we announced the acquisition strategy at the end of last year. Since then, we have conducted trials of potential vehicle designs and we will announce the results next month. Last week, my noble Friend Lord Drayson announced that a team from Thales UK and Boeing had been selected almost two months ahead of schedule as the system of systems integrator—SOSI. That represents excellent progress.

Crispin Blunt: Will the Minister give way?

Bob Ainsworth: I shall allow the hon. Gentleman to come in soon, but I want to make a little more progress.
	The delivery of Typhoon to the RAF continues. Forty-six are now in service and, with the Tornado F3, the aircraft shares responsibility for the UK quick reaction alert task. It can respond in minutes to any unauthorised entry into UK airspace or assist aircraft in distress. The recent decision of the Saudi Government to buy 72 Typhoons is good news. It is a great boost for British industry and for British jobs.
	In July, my right hon. Friend the Prime Minister announced that the Defence Export Services Organisation would be transferring responsibility for defence trade promotion to UK Trade and Investment. A cross-government study is looking into how best to implement that and will be complete by the end of the year. We will of course keep the House informed. That change of responsibility is to ensure that we can provide more effective and coherent support across all our exports. There will be no lessening of our commitment to support the defence industry. When I visited the defence systems and equipment international exhibition at Docklands last month I was enormously impressed by the depth and breadth of our export effort, particularly from our less well known small and medium-sized companies. There will be no lessening of our support for our defence industry export effort.

Liam Fox: What on earth is the logic of abolishing DESO and then having a cross-departmental inquiry into how we might best support defence exports? Why not do things the other way round? Surely it makes sense to have the debate about how best to proceed before a decision is taken. What has been done sounds like madness to the rest of the House.

Bob Ainsworth: The hon. Gentleman needs to recognise that we need to join up our export effort in Great Britain plc and ensure that it is strong not just in defence but across the piece. That is our intention. As I have said, it is not our intention to pull away from, or lessen our support for, our defence industries and their export efforts.

Several hon. Members: rose —

Bob Ainsworth: I have given way on the point and will not give way again.
	Our armed forces are among the most capable in the world. Improvements in technology, innovation, sustained growth in defence spending, and regular adjustments to our doctrine, structures and training mean that they are well able to meet the tasks that face them. There have been difficulties with some aspects of our procurement. Developing and producing high-quality, battle-winning equipment at the forefront of technology for use in demanding but unspecified operational conditions many years into the future is never going to be easy. When things go wrong, we must acknowledge that and strive to put them right.
	Fundamentally, however, the equipment that our forces now have and the way that it is supported is a success story. We can perform far more tasks at greater range and with greater precision than before. That is not just my view; it is the opinion that I have heard from commanders in theatre and the opinion of the joint chiefs of staff. As I said at the outset, we owe the men and women of our armed forces a great debt. The Government are committed to ensuring that they continue to receive the equipment and the support that they need for operational success. We will do that now and in the future.

Liam Fox: I begin by associating myself with the Minister's comments about our armed forces, especially those who have fallen in the conflicts in Iraq and Afghanistan. The sacrifices that they made should focus our minds on the issues before us. It is worth reminding ourselves, at the beginning of this debate on equipment, that without the professionalism, bravery and commitment of our armed forces, the whole debate would be pointless. Indeed, there are many who make a false distinction between procurement and welfare issues. Procurement is a welfare issue. For our servicemen and women and their families, there are few issues as important as whether they have the equipment to maximise their safety and ensure the success of the tasks that they undertake in our name.
	Today, we want to look at what the comprehensive spending review settlement will mean in the years ahead, at the Government's record to date, at the implications for the big procurement projects and at project management. As a share of total Government spending, defence expenditure has fallen from 7.8 per cent. in 1998 to 6.1 per cent. in 2006, despite the fact that we are involved in two wars—in Iraq and Afghanistan—with the inevitable reduction in the life expectancy of much of the equipment involved. Funding from the Treasury reserve for urgent operational requirements—UORs—does nothing to diminish an ever-increasing liability that must be met, in terms of equipment, at some point. In that context, we must look at Ministers' boasts that they will achieve a 1.5 per cent. annual real-terms increase.
	The last settlement that was trumpeted in similar terms to this one resulted in three infantry battalions being cut and the loss of three destroyers and three frigates. What are the likely casualties this time round? If the rumours and leaks circulating in the Ministry of Defence are anything to go by, we could lose a further five frigates and destroyers and two submarines, up to 6,000 personnel from the Army and two squadrons of Tornado GR4 attack aircraft, cutting the RAF's front-line squadrons from eight to six. Perhaps the Ministers will take the opportunity of this debate to snuff out those rumours.
	My hon. Friend the Member for New Forest, East (Dr. Lewis) made a point about the Navy earlier. This is not a question of a change in our assumptions about the Navy's numbers. The Government presented the strategic defence review, in which they said that they required two carriers and 32 destroyers and frigates. When the Government's security Minister was the First Sea Lord, he said that we could not get by with fewer than 30 destroyers and frigates. If the Minister thinks today that we can get by with a lower number, let him justify that to the House. We want to know what has changed in the strategic assumptions that would allow that to happen. The argument that we are normally given is that we do not require platform numbers because we have increased capabilities, but that argument cannot be deployed indefinitely. We cannot keep cutting platform numbers while saying, "Because they can do more, we require fewer of them." Ships cannot be in two places at once. If the Government intend to make further cuts to the Navy, they must explain to the House, to the Navy and to the country what strategic changes have taken place that will allow them to move from the plans that they brought to the House of Commons in recent years.
	All these elements occur against the Government's poor record of managing the defence budget. In September this year, the Public Accounts Committee outlined the Government's performance. In 2005-06, 19 of the major equipment projects, excluding the Typhoon aircraft, were forecast to cost £27 billion, some 11 per cent. over the approved budget, and had been delayed by a further 33 months. Indeed, the Department's performance against its key user requirements is worsening, with only 17 projects being expected to achieve all requirements—one fewer than in 2004-05.
	As usual with anything run by the current Prime Minister, we have to read the small print to understand the true picture. Some of the procurement reforms of recent years might have helped to stop procurement costs spiralling entirely out of control, but substantial capabilities have been sacrificed to achieve that. The number of Type 45 destroyers being procured has fallen from 12 to eight, and possibly as few as six. There have been reductions in the number of guided multiple rocket launch systems, Brimstone missiles and recovery vehicles being procured.
	The Public Accounts Committee reported that the MOD had previously said that it had carried out a departmental review that came up with 44 ways to reduce the forecast cost of these projects by £781 million, or 3 per cent. of the total. Yet, on closer examination, it was discovered that £91 million represented a rebate and exemption from Her Majesty's Revenue and Customs, and a further £448 million did not represent real savings at all, as the Department transferred the expenditure to other budgets.
	The real effect of this mismanagement has been on the operational efficiency and safety of our armed forces. The most appalling indictment in the life of this entire Government has been that relating to the death of Sergeant Roberts in Iraq as a direct result of a Government decision not to procure sufficient quantities of enhanced body armour, purely for political reasons. The assistant coroner said that
	"to send soldiers into a combat zone without the appropriate basic equipment is, in my view, unforgivable and inexcusable, and represents a breach of trust that the soldiers have in those who govern them."
	No more damning words have been said about any Government.
	Then there was the utterly inexcusable and, in my view, inexplicable decision in 2004 to cut the FRC helicopter budget by some £1.4 billion. At a time when our troops are facing a shortage of lift capacity in both Iraq and Afghanistan, that decision was astonishingly complacent, if not downright incompetent. The consequence has been a chronic shortage of helicopters in both theatres and, although we welcome the procurement of the Merlins and the eventual conversion of the Chinooks, that has all happened far too late in the day, as my colleagues who have had experience in Iraq and Afghanistan will attest.

Ann Winterton: My hon. Friend is describing the procurement of helicopters, and the implied costs involved. Is it worth considering the fact that one can often rent helicopters at a far lower price and therefore get far more of them to use in theatre? That would allow us to provide them much more quickly than the very expensive procurement process does.

Liam Fox: The aim must always be to give our troops the equipment that they require, when they need it. However, we must also take into account the fact that many of the helicopters that are available commercially might not carry the defensive aids and equipment that we take for granted in some of the helicopters that we procure. If the necessary protection could be guaranteed, it would make perfect sense to get them as quickly and cheaply as possible. It is not only right for the Government to do that; it is their duty to do so wherever possible.

Lindsay Hoyle: The other point that the hon. Gentleman ought to make is that some members of the coalition in Afghanistan have not been playing their part. They should have been supporting our troops much better, and the use of their equipment should have been offered, rather than our having to scrounge around. That is the reality: we have been let down by our partners. Does the hon. Gentleman not agree that they should take up some of the weight that has been placed on our shoulders?

Liam Fox: It is not often that I am happy to have words put into my mouth, especially by Members on the other side of the House, but the hon. Gentleman is absolutely correct. Some of our NATO partners have to understand that being in an alliance means having to do the things that they do not want to do, as well as doing the things that they do want to do. In Afghanistan in particular, the heroic efforts of the Canadians and the Danes, and to a certain extent the Dutch, alongside ourselves and the United States, are an example to the other members of NATO. Security is not optional. If they want to enjoy global security, there is a price to be paid.
	I have criticised the MOD's management of the defence budget , but it should not shoulder the entire blame. The just-in-time approach to procurement is entirely Treasury led. The Minister and I have served on opposite sides on a Finance Bill and we both know exactly how the Treasury operates in the United Kingdom. The Treasury approach has resulted in an increasingly difficult procurement environment. Given the strategic uncertainty and constantly evolving operational environment, it is extremely important that we give personnel the flexibility of equipment choices to enable them to perform their tasks successfully. Despite Treasury resistance, UORs have proved vital, which is why I believe that Members on both sides of the House will find it extremely disappointing that  Defence News last month stated that
	"industry sources say that Treasury officials appear to be tightening up the approval process and seeking to ensure that only truly urgently needed equipment is obtained from UORs."
	Indeed, sources say that Treasury officials might suspect that not everything ordered via UOR was really urgent. I would be grateful if the Minister, in winding up the debate, dealt with this question; it is a fundamental issue, not simply a theoretical one.
	The hon. Member for Norwich, North (Dr. Gibson), who is no longer in his place, made an important point about the need for better parliamentary scrutiny of major procurement programmes. That need not impede the MOD; in fact, it could eventually help to reduce cost and time overruns. We in the House of Commons simply do not have sufficient access to the details of equipment programmes and do not know how projects will fit into the defence budget in the years ahead. It is difficult not only for MPs but for the military to judge the Government's plans sufficiently.
	The Prime Minister says that he wants new politics, so perhaps the Minister will assure Parliament that Members will have a chance to look at the 10-year funding forecast for major procurement projects. For example, in the years of the comprehensive spending review and beyond, we would like to see how much is allocated in each year for spending on aircraft carriers, the future rapid effect system, the replacement of the nuclear deterrent or the defence training review. Unless we know that, we can make no sense of whether the Government's proposed allocations are realistic or simply a wish list. The House operates in the dark, which other elected assemblies simply would not accept.
	Although we have welcomed the carrier announcement, a number of concerns and unresolved issues remain. The in-service dates are now 2014 and 2016 and the cost will be £3.9 billion, but in which years will the costs be borne? Will the Minister update us on contract negotiations?
	Some progress has been made with FRES, but medium-weight armoured vehicle procurement has been badly handled, and we should be much further ahead than we are. Nine years after the Government announced their intention to procure new vehicles, we have not completely reached main gate, which is unacceptable. As the Defence Committee said:
	"This is a sorry story of indecision, constantly changing requirements and delay. We are concerned that the FRES requirement may simply be unachievable without a major technical breakthrough. The tension between the survivability and deployability is particularly acute. Satisfying both requirements may prove impossible. It is high time the MoD decided where its priorities lay".
	Despite that, we still get procrastination. Similarly, with the replacement of our nuclear deterrent and the defence training review, we need to know where the potential costs will manifest themselves in the actual budget; otherwise we can make no sense of any of the Minister's promises today.
	The fact that our procurement process too often produces long delays and budgetary overruns is hardly a bone of contention. The consequences are that we often pay too much for things that are almost out of date by the time we get them. That makes no sense. It provides neither value for money for the taxpayer, nor a predictable equipment flow for the armed forces. However, it would be churlish not to acknowledge the efforts made to improve the situation, not least by the noble Lord Drayson. Whatever its merits, the defence industrial strategy needs to be refined further. We need a more rigorous assessment of what constitutes sovereign capability and whether we are willing fully to support it through our economic and procurement policies. At the same time, we need to be frank about where we are beginning projects that are either duplicating work undertaken elsewhere or are unlikely ever to come to fruition. Better project management is essential to achieving better value for money.
	We must also recognise that if we want British defence jobs to be protected—and they are a vital part of our economy, as well as an essential part of our defence infrastructures—we need to expand British defence exports. We intend to begin a consultation with our defence industries to see how a future Conservative Government might best achieve that. Stronger exports are, in the longer term, the best way to create entrepreneurship in the defence sector and secure defence jobs. That will be taken up by my Front-Bench colleague in his wind-up speech. The Minister and I have already exchanged views on it.
	All these issues may sound technical, which probably explains the lack of attendance in the House today, but what might sound technical in the comfort of the House of Commons is of vital importance to the safety and well-being of our armed forces personnel and the adequate protection of our country. The difference between success and failure in any project often lies in the detail. There is no inherent reason why there should be a difference between the parties on that issue, but the House of Commons must be given a greater role because too many of the Government's failures are having a negative impact on our armed forces and our ability properly to defend our country's interests, which is simply unacceptable.

Quentin Davies: It is a pleasure to follow the hon. Member for Woodspring (Dr. Fox), who made a good speech. He often makes good speeches on this subject, and I have no doubt about the knowledge and commitment that he and his colleagues on the Opposition Front Bench bring to defence matters. When I sat on the Conservative Benches, I often found myself agreeing with them on defence matters. However, it was always difficult to get them to live up to their rhetoric. They were continually saying, as they have said today, that the Government were not procuring enough helicopters, frigates or submarines. There is always a good case to be made for procuring things that are not procured at the moment. There is always a good case to be made for going back to some previous target for procurement of a particular type of equipment. Whenever I asked what the Conservative Front Benchers proposed to do about the problem, however, I always got the same answer that we have heard this afternoon. No, they were not committed to spending any more money. They would either reduce their commitments, or if not, they might think a bit more about it— [Interruption.] Does the hon. Member for Congleton (Ann Winterton) want me to give way?

Ann Winterton: Any simple housewife will tell the hon. Gentleman that the important thing is not what one spends, but how one spends it. The money wasted on the defence budget could have provided much more equipment. Questions have been raised about those matters, and I suggest that the hon. Gentleman do his homework before speaking on this subject.

Quentin Davies: I am coming on to that. As a matter of fact, Defence Equipment and Support—the new version of the Defence Procurement Agency, merged with the Defence Logistics Organisation—has an extremely good and improving record of dealing with these issues. I am afraid to say that the Conservative party, in simply saying that it can identify and reverse a lot of waste, will have no credibility unless it is prepared to be specific about how it is going to save the money. It is no good the Conservatives saying that if the commitments are too great they will cut them back, unless they are prepared to answer the question that they have never answered, as they have not answered this afternoon: what specific commitments are they going to cut in the present context? They can see the challenges that the country faces as well as Labour Members can, so which particular commitments are they going to cut? There is always a silence on that.
	There is a fundamental hollowness in this matter, as in other matters at the heart of the Conservative party. I am not making a personal attack on the hon. Member for Woodspring, as this is a generalised phenomenon. It is all about the way the Conservative party has been managed and been directed. It is focused entirely on pretence and the creation of image. When it comes to the difficult and responsible task of costing tax promises or defence promises and looking at the hard questions and difficult dilemmas that real Governments face, the Conservative party shies away from it.
	As I said, the Government have a fine record on defence procurement and I want to pay tribute to my Front-Bench colleagues this afternoon. I base my judgment on the findings of the Select Committee on Defence, an entirely objective body, which found that the Defence Procurement Agency achieved 100 per cent. of its targets in its last year before the merger. Those targets are rigorous; I will not go through them as I do not have time, but anyone with any background in the subject knows how extremely difficult it is to achieve those targets. Yet 100 per cent. achievement was reached, against the background of appalling cost and time overruns in the past. Some of us thought that we would never get the operation to succeed as it has.
	I would also like to congratulate the Minister on the introduction of the urgent operational requirements system, which has proved splendid in practice and has resulted in Mastiffs being delivered in fewer than six months from contract to operation. Those are fine achievements and I am sorry that the Opposition were too churlish to recognise them.

Bob Russell: rose—

Quentin Davies: I will give way once again, but I will not have time for any more interventions.

Bob Russell: The hon. Gentleman is clearly well informed on these matters. The Minister refused to let me intervene earlier, so perhaps the hon. Gentleman can answer my questions. Does he agree that all the engines that power Her Majesty's Royal Navy should be manufactured in this country? And will the new vessels that we have heard about all be powered by British-made engines?

Quentin Davies: My concern is simply to ensure that we have the equipment that our forces need in order to do the job. That is the No. 1, overriding priority. The No. 2 priority is to secure the equipment in the required form, to the required specification and at the required time, and at the lowest possible price for the taxpayer. All other considerations are tertiary at best—including, I have to say, the creation of employment in the defence industries.
	We must be tough and rigorous about these matters. There are choices to be made. I have tried to give an honest answer to the hon. Gentleman's question.

Lindsay Hoyle: rose—

Quentin Davies: I will give way very briefly to my hon. Friend.

Lindsay Hoyle: Does my hon. Friend agree that when we have the best of British jobs and are producing the best of British engines, we ought to support that?

Quentin Davies: It goes without saying that if that is the case, the best deal will be procured from that source.
	I think it fair to identify four phases in the history of defence procurement in recent times. The standard cost-plus model was universal in the world until the 1980s, but economically it was clearly an extremely wasteful and damaging process. The defence industry had no incentive to keep its costs down, unlike any industry operating in normal market conditions. Ultimately that is very bad for an industry, because it prevents it from becoming as efficient and innovative as it should be.
	We took the first steps in moving away from that model under Peter Levene, now Lord Levene, when he became chief of defence procurement. We moved to a competition-oriented model, with which we encountered great difficulties, because when major projects involve major technology risks, people are not prepared to quote a fixed price. That makes it necessary to return to a system of contractual arrangements under which much of the risk is taken by the procurer, who must do a deal at a very early stage with the supplier, and as a result it is not possible for competition to operate effectively.
	We then moved to the smart procurement system, which we used until fairly recently. Its main aims were to prevent a confrontational relationship between the supplier and the purchaser, to ensure that one did not try to cheat the other, and to give an incentive for everyone with expertise and answers to bring them to the table. The insight was relevant, and there is no doubt that smart procurement has produced some great successes—along with some very difficult problems, some of which have been mentioned today. However, we have all found that it is not the whole answer, because it, too, does not allow us to benefit fully from competition. There is always a tendency to oppose the forming of an initial partnership solely with the prime contractor and favour letting in parts of the supply chain to gain the real benefit and the real ideas, and that means a diminishing of competition throughout the system.
	Now we are moving to a system that was called DPA Forward, until the two agencies were merged. I think we will all be very interested to see how it works and what it consists of, but my view is that where smart procurement needs to be tweaked, modulated or reviewed, the main purpose should be to ensure that we can benefit more from competition. There are a number of problems, one of which is that there is a limited amount of competition within the frontiers of the United Kingdom. As some of my colleagues have pointed out, there is competition in shipbuilding, between companies such as Vosper Thornycroft and BAE Systems, and that is fine; but in some areas it is impossible to benefit from competition without going outside the United Kingdom.
	In the United States it will almost always be possible to meet defence requirements by buying something off the shelf, but that would probably be the last contract that the buyer would ever let, because we would no longer have any capability of our own. Next time around we would be entirely dependent on an American supplier. Not only would we have no leverage in terms of price and normal commercial negotiations, but we might well find ourselves in precisely the difficulty that we have experienced with the joint strike fighter. We might not get the necessary technology, or the Americans might try to sell us something slightly sub-standard that did not involve the latest technology. We cannot put ourselves into such a position.
	Unless someone has thought of a fifth route that has not occurred to me, there is only one alternative to that range of possibilities, with the difficulties that are attached to them. That is more competition within the European Union. It has been established for a long time that that would be desirable if it could be achieved, and there have been various attempts to achieve it. It is also generally recognised that the old system of joint procurement that was used for the Tornado was hopeless because it was based on the principle of juste retour, which means that every country that is part of the consortium involved must receive a proportion of procurement equivalent to the proportion of the funds that it contributed to the initial development and research costs. That was a very inefficient and anti-competitive system.
	We then established OCCAR—the Organisation for Joint Armament Co-operation—a joint procurement agency based in Paris, which is another bureaucracy. I do not wish to run the agency down, for it has done some good work, but it has also experienced some problems. I do not think that the A400M, for instance, has been a brilliant success so far. That system does not strike me as ideal. It is very bureaucratic; it is not competition, or the use of markets.
	We have a market—the single market—which has been outstandingly successful in every other area of economic activity that anyone cares to mention. Let me make a suggestion. I am not advocating this, because I do not know enough about it—I have not done enough of the homework to be sure that I want to advocate it—but I am sure that we ought to consider systematically an option that will no doubt shock a number of Opposition Members. I believe that we should consider simply getting rid of the special protection for the defence industry that exists in the single market legislation—I cannot remember which clause in the treaty contains it—and extend the single market, in the form of the public procurement directive, to defence procurement. We should make it the rule, not the exception, that when we have a defence procurement opportunity we entertain bids from countries throughout the European Union, on a reciprocal basis. Because of the legal and enforcement structures in the EU, everyone else would have to observe the same rules.
	Of course there would be certain cases in which individual British companies thought they had lost out, but I am tempted to believe, at least on a preliminary basis—I stress that I am speaking on a preliminary basis—that we would be the net gainers. We have an enormous number of very successful businesses. Some of them are niche businesses—avionics businesses, for example—and some are producing larger platforms, but we benefit from considerable expertise. I also believe that, in practice, we are always slightly more inclined than most of our continental partners to be open-minded, liberal and in favour of open markets. In practice, we have opened our defence markets where other countries have not.
	A good example in the non-war-fighting area is roll-on/roll-off ferries. Two orders for those were placed with German yards and two were placed somewhere else in the European Union, possibly in the Netherlands—I cannot remember. There was probably some agitation among Scottish colleagues of mine when that happened, but so far it has been a one-way street.
	As far as I know, no equivalent of the Defence Procurement Agency—or Defence Equipment and Support, as it is now called—or of the Ministry of Defence in any of our EU or NATO partners has placed orders for equipment for military purposes, let alone war-fighting equipment, in this country, except when no company in that country could provide the equipment. Thus there has been no competition at all in that direction, although we have engaged in some competition in procuring from the EU. That is a foolish situation in which to be—or, at least, it would be foolish of us to resist the idea of opening up the market completely, given the assurances provided by the treaty, the legislation, the European Court of Justice and the European Commission that such a change would be enforceable and that there would be a genuinely free market in defence equipment.
	Let me make my final point, in the space of one minute—

Lindsay Hoyle: Will my hon. Friend give way?

Quentin Davies: I cannot, because of the time. I hope that my hon. Friend will forgive me.
	This is a very important matter. As has rightly been said by those on both Front Benches today, lives are at stake. If we can save money in defence procurement, we shall be able to buy more and better kit, we may be able to provide more training, and we shall be able to buy all sorts of support that our military personnel not only deserve but desperately need. Therefore, the overriding obligation in defence procurement is to ensure that we are being as efficient as possible, and that we do not get carried away by simple lobbying by defence suppliers to serve their own individual ends. The purpose of the operation is to provide what our military needs at the lowest price, to enable us to procure more. More competition is the way forward.

Nick Harvey: I welcome the Minister to his first debate in his new role. I appreciate that it is a difficult baptism for him; procurement is principally the responsibility of another Minister. However, we welcome him here today. Our debates are sometimes robust, but he will be relieved that, thus far at least, they have not been as robust as Mr. Jeremy Paxman can be when interviewing on "Newsnight".
	It is good that we have the opportunity today to have this debate about defence procurement. It comes at a time when there is increasing concern on the part of the public, the media, parliamentarians and the armed forces themselves about the critical degree of overstretch that we are experiencing. That takes its toll not only on the men and women who serve in the armed services, but, as has been said, on the equipment that they have in Iraq and Afghanistan, which in many cases is also suffering from overuse. In many cases, its life expectancy will be shortened as a result of the extra burdens placed upon it.
	It is intriguing that we are having this debate on the same day that we have had the comprehensive spending review, confirming as it did the defence spending figures for the next three years. Having had the opportunity to look at those, we can see that, from this year, expenditure of £32.6 billion will go up over three years to £36.9 billion, an increase of £4.3 billion. The Government were spinning that in July as £7.7 billion. The hon. Member for Woodspring (Dr. Fox) and I have memories of such Government accounting from when we served our parties on health: increases in health spending were accounted in the same way.
	As we have heard, it all boils down to an increase year on year averaging 1.5 per cent. above inflation. Incidentally, most of it, if we look closely, is in the third of the three years. For the first and second year, we will barely even keep up with inflation. That means that the pattern of increases that has obtained in recent years will continue. The message seems to be business as usual. In the light of the concerns that I alluded to a moment ago about the problems that overstretch is creating, I have to ask whether that is going to be good enough. When the Ministry of Defence looks at the settlements that some other Government Departments have been given, I think that it will breathe a sigh of relief, as things could have been even worse. However, when we look at the scale of the challenges, we will have to probe over the years how things are going to work.
	The MOD has a real-terms increase. I welcome the priority that it is giving to certain areas: it has said this afternoon that it is going to pay more attention to the armed forces, armed forces welfare, housing and the conditions in which individual men and women are working. However, if it is going to do that sincerely, and I believe that it will, many of the programmes that we see looming on the horizon are going to stretch further to the right or to be scaled down.

Bob Ainsworth: rose—

Nick Harvey: I see the Minister hovering and his arm coming out. I know what he is going to ask and I will give him the opportunity to do so. However, as the hon. Member for Woodspring said, we do not have laid out before us what is going to be spent and when. The Minister is going to ask me which things I do not want to be moved to the right. How can I possibly answer that when he does not give us the basic figures with which we could begin to make a case of that sort?

Bob Ainsworth: The hon. Gentleman lays out the pressures and the difficulties. He is right: the question is extremely predictable but it still has to be asked. It is the same question that I asked the Conservatives. It is all right saying that an increase of 1.5 per cent. above inflation is not enough, but the pattern is a 10-year growth in spending on defence. If that is not enough, what would the Liberal Democrats commit to? It is no good him saying that he cannot see the figures. Of course, we can improve our scrutiny and all the rest of it, but what above that would the Liberal Democrats like us to spend?

Nick Harvey: As I go through my remarks, I will look at the various procurements that are stretched out before us and we will have to address which of them are likely to be the casualties and what the implications of any delays and stretches to the right will be. Something or other has to give. The Government have not as yet cancelled any of the big procurements that we await. They have not as yet announced any downscaling of them. It is not simply the Liberal Democrats saying that we cannot get all that out of the budget on the scale that has been laid out. Many independent observers are making the same point, including the International Institute for Strategic Studies. From memory, Dr. Lee Willett, director of the Royal United Services Institute, was saying the same thing.
	We already have a seriously overheated equipment plan. The costs—the military inflation—grow year on year, so we see a shift of those programmes to the right. They get delivered in stages, or—this is all too common—the numbers, the size and the capability get scaled back. Eventually, having been state-of-the-art technology at the outset, they arrive years out of date. A good example of that would be the Eurofighter or Typhoon programme, which from memory was signed off by John Nott when he was Secretary of State. It has only come into service in the past couple of years.

Liam Fox: We accept that the Government are maintaining a permanent information advantage over Parliament. If the Government say that they are setting aside £5 billion for housing improvements or £110 million for new Mastiffs, we cannot tell whether they are squeezing other things out of the budget, because we do not know what the procurement figures are in which years. Only the Government know that. That is an example of the Executive maintaining an advantage over Parliament and Parliament therefore being unable properly to scrutinise the Executive.

Nick Harvey: I agree. I agree also with those who have said that proper parliamentary scrutiny could improve the procurement process. Some of the inherent flaws in that process contribute to the unfortunate outcomes to which I have referred.
	In 1998, the Government conducted a strategic defence review. It is broadly correct to say that there was all-party consensus on its big-picture conclusions at that time and that that has continued, but the world has changed a great deal in that time. The events of 9/11 and their aftermath mean that the world that we are looking at now, that we are planning for in the years to come and for which procurements are to be prepared, is very different. The time is now overdue for another strategic defence review.
	Some may groan at the thought of such a review but they have them regularly in the United States and at much shorter intervals—every four years—than in the UK. It is time that we undertook such a review again; it is overdue. Through such a review, we can decide which of the various procurement plans that are stretched out before us will be appropriate to meet the challenges that we will face. We must plan our procurement on the basis of the strategic environment that we face now and that we expect to face in the years to come. We must have a flexible response. Of course, we cannot anticipate what is around every corner, but a return to the baseline and having another look are long overdue.

Lindsay Hoyle: Could the hon. Gentleman state clearly what his view is? He is very knowledgeable on defence and has a great vision for defence. Within that vision, does he support a further tranche of Typhoon? Does he support the workers in Lancashire?

Nick Harvey: The hon. Gentleman is asking me to put the cart before the horse, but if we are to have a strategic defence review and consider future requirements we must not pre-empt that by making assumptions beforehand. However, he knows that we have been sceptical about the matter raised, and that remains the case.
	The urgent operational requirement—UOR—has undoubtedly frequently saved the day in Iraq and Afghanistan. However, the Treasury is now sabre rattling to the effect that it will not continue to bless the recent scale of procurement that has taken place through the UOR system, and there has been media comment that it is becoming a significant part of the procurement process. That further underlines the need both for a review of the strategic environment and for the overall planning methodology that we use for our procurement processes to be improved. We cannot continue to get away with plugging the gaps on such a scale through the UOR or a similar system. We have also heard warnings from within the armed forces.

Nicholas Soames: Does the hon. Gentleman not accept that when a war is fought on two fronts, there is no alternative to a system such as the UOR because procurement requirements become urgent in the light of the circumstances faced by the troops on the ground? We will never be able to do away with the UOR; it is an important and effective part of the procurement system.

Nick Harvey: I certainly agree with that, and I have said that the UOR has been vital in saving the day on a number of occasions. I am not suggesting that the Treasury should be allowed to have its way, but I am simply flagging up a point that has already been made: that the Treasury appears to be getting agitated on this matter. I should also refer to various Defence Committee reports; it has repeatedly expressed worries that the MOD initial budgeting processes do not seem to be all that they should be, and that supplementary estimates are produced later. That is symptomatic of the same situation.
	General Dannatt has also often stressed in speeches and remarks that the armed forces—specifically the Army in his case—are in desperate need of new procurements coming on stream, particularly FRES, the future rapid effect system, which we have heard about this afternoon. I welcome last week's announcement, but trumpeting the fact that the announcement is two months early rather ignores the fact that it has taken nine years to get to where we are now. This particular announcement might have been two months early but, overall, it is running long behind the curve. FRES is undoubtedly very important, as are some of the other forthcoming procurements, and we can only hope that the budgetary restraint to which I have alluded will not have an impact on the FRES programme's time scale or capability. I gather that the plan now is to get the first vehicles operational by 2012. That is welcome in the sense that the situation could have been a great deal worse, but there is a need here and now for this sort of generation of vehicles. The deployment of some Mastiffs is welcome; but, again, they are clearly plugging a gap. It is also hard to understand quite how the number of Mastiffs that is now being talked about will fit into the future overall inventory.

Andrew Murrison: I am sure that the hon. Gentleman is aware that our indigenous defence industry is important to FRES and support for our troops in Iraq and Afghanistan, and I notice that his signature is absent from an early-day motion 2030 tabled in the names of his hon. Friends the Members for Colchester (Bob Russell) and for St. Ives (Andrew George). That motion would have the effect of imposing a windfall tax on our indigenous defence suppliers so will the hon. Member for North Devon (Nick Harvey) add his name to that? If not, what conversations will he be having with his hon. Friends?

Nick Harvey: I commend the hon. Gentleman on his sharp sight. I confess that I have not seen that early-day motion, but I will give it my attention and conduct the discussions he suggests after I have done so. I thank him for drawing it to my attention.
	The Public Accounts Committee recently rightly raised concern about the MOD's biggest weapon project running over-budget and falling increasingly behind schedule. To turn to a point made by the hon. Member for Grantham and Stamford (Mr. Davies), we must at all times be concerned about the waste of public money. It is essential to the troops that we get what they need to them as quickly as we can, but it is also essential to taxpayers that we drive a better bargain for their money than we have done on all too many occasions. The culture of delay that has developed over the years is not only to the detriment of the armed forces, but it also costs taxpayers dearly. The fact of the matter is that we end up spending more than we should, getting less for our money than we wanted, and getting it later than we should have done—and its capability is often not appropriate for modern circumstances and is a pale imitation of what was originally planned.
	We know that the equipment situation in Afghanistan is dire. Reports have mentioned only half of the Apache helicopters working, only 70 per cent. of the Chinooks being available, only 16 of 96 promised armoured vehicles being delivered, engineers moving high explosives in soft-skinned trucks and soldiers having to buy their own kit as the Army provisions were below requirement and not fit for purpose. That is an unacceptable situation.  [Interruption]. It is all very well for the hon. Member for Chorley (Mr. Hoyle) to say that that is not true, but serving members of the armed forces have talked to me and other Members about that—those serving members have said that that is their view. I appreciate that others have a different view, but I am simply relating to the House what members of the armed services have said directly to me.

Lindsay Hoyle: The truth of the matter is that the kit is there, but there is also personal choice; soldiers always have bought the kit that they feel suits their requirements, and they always will do that. We ought not to embroider the story.

Nick Harvey: I am not embroidering the story. That point the hon. Gentleman makes is exactly the same as the point I am making: members of the armed services feel driven to purchase their own equipment. They feel driven to do so because they have no confidence in the equipment supplied to them.

Nicholas Soames: Nonsense.

Nick Harvey: The hon. Gentleman says from a sedentary position that they are not, but serving members of the armed forces look me straight in the eye and tell me that they are, for the reason I have given. I do not believe that anyone can, with confidence, say otherwise. We must do better by our armed services not only in the supply of boots but, more importantly, in the supply of big equipment.

Linda Gilroy: The hon. Gentleman has just mentioned a basic bit of kit. When was the last occasion somebody came to him to complain about adequate boots not being available?

Nick Harvey: From memory, as recently as March this year, when I heard from people who had just come back from serving in Afghanistan last winter. If the hon. Lady has information that a transformation of the supply has taken place since March, I invite her to report that to the House.

Ben Wallace: In light of the hon. Gentleman's comments about individual soldiers being driven to purchase kit, perhaps I could refer him to the diaries of Private Clay of the 3rd Foot Guards—probably the finest regiment in the British Army. In his diaries at the battle of Waterloo, he mentions exactly the same problem of the inadequacies of his kit and that he was forced to purchase a new knapsack. It is not uncommon for individual soldiers to buy personal equipment, but I have never met a soldier who was driven to buying a larger piece of equipment, such as a tank.

Nick Harvey: I am not quite sure that I follow the hon. Gentleman's last point, but I accept that this is not a new phenomenon. However, that does not make it any more acceptable that so many of the armed forces feel driven—feel driven, I repeat—to go out and do what I have described.
	Let me turn from boots to helicopters. I cannot conclude my contribution to this debate without mentioning them. It was a subject that was always very dear to the late Lord Tim Garden who, tragically, died in the summer. He is unable to continue to make his point, so I do it in his stead. The helicopter situation in both operational theatres is desperate. In both those theatres, they are indispensable, but there are still too few. Those that there are have restricted flying times and operational constraints that affect their support role in both medical and military missions.
	We need not revisit the saga of the grounded Chinooks here, but suffice it to say that it has been an absolute disgrace. Years after the Chinooks were first ordered, the same problems continue to plague them. They lack airworthiness. The forces have not had the helicopters that they need at their disposal. I will be interested to hear from the Government about their plans for the future.
	My hon. Friend the Member for Yeovil (Mr. Laws) asked the Minister about the partnering agreement with AgustaWestland in respect of the Future Lynx programme. That, of course, has been signed and there is an anxiety that the Government may not follow it through on the scale or time scale that the armed forces need. Beyond the issue of the Future Lynx is the serious issue of what will replace the Sea Kings and Pumas—they are antiquated. Sea Kings should not be used in anything like the circumstances in which they are, years after they were built for a completely different purpose. If we are looking ahead, we must have clarity about the Government's longer-term intentions on that issue.
	There is a strong correlation between, on the one hand, poor equipment and vital shortages and, on the other, the toll being taken on the armed forces and the overstretch about which we are all so concerned. We have heard about the widely reported and speculated-about cuts in the naval fleet. The Government need to come to the Dispatch Box and clarify their intentions in that regard; it is simply unacceptable that such reductions in our capability should be made by what is frankly a stealth process. The Minister needs to clarify the issue.
	The aircraft carriers have been announced and that is welcome. The hon. Member for Chorley (Mr. Hoyle) asked me about Eurofighters, but the issue of what will fly off the aircraft carriers is a long way from being clear. It is time that the Government started to indicate what they anticipate will fly off the carriers, particularly as the joint strike fighter, which had been predominant in the Government's thinking on the issue, is itself stretching further off to the right and is certainly further to the right than the now announced and expected deployment dates for the two aircraft carriers. Whether those dates will be achieved is another issue altogether, but there is clearly a time gap between the two things.
	The defence industrial strategy is a brave attempt to improve our procurement processes. I am pleased that Lord Drayson is still in position and is able to try to pursue the new approach. However, it is important, in identifying head contractors and the operators with whom the Government are going to deal, that the interests of small and medium-sized companies are not forgotten. When the Government make their key decisions about suppliers for the FRES project, that should be one of the key criteria by which they should be judged. What will be the role of small and medium-sized firms in that provision? There will be other considerations, such as what capacity there will be for putting new capabilities on to the vehicles as time goes on; inevitably, whatever they were designed for initially will need to change as the years go by. Making sure that whatever is designed is capable of being adapted, changed and added on to as time goes on is vital.
	We have to retain knowledge and capacity in certain key industries. We need to decide which those are on the basis of national security. As has been said, there will be other instances when it will be possible to buy off the shelf elsewhere. The more that we can do that in an internationally competitive environment, with allied countries being in a position to provide options to us, the better—the better the value that we will get for the taxpayer and the better the product that we will ultimately get for our armed forces.

Nicholas Soames: May I first warmly welcome the Minister for the Armed Forces, who is no longer in his place but who opened the debate tonight? He performed gallantly when dropped, as  The Sun so charmingly put it this morning, deep into "the Brown stuff" last week, when the Prime Minister made an announcement in Basra about force levels and the number of those returning to this country, without first having told the Secretary of State that he was going to make it. I wish to place it on record that the Prime Minister's actions in that regard and many others in the past week were absolutely contemptible and unforgivable, and that he took advantage of his position by being among our troops.
	My speech will be brief. I want to ask a number of questions in no particular order. First, I am told that the Fleet Air Arm would prefer to have the Super Hornet maritime strike attack aircraft, which it could buy off the shelf, instead of the joint strike fighter. I would be glad if the Minister could let me know the position on that matter. Has that been or is that being considered, given the escalating costs of the JSF?
	Secondly, I am anxious to know what the Army is doing about recruiting. How does the recruiting stand? Many regiments are having to go on operations with composite squadrons and companies; that, of course, is of great concern. The lack of manpower is leading to serious overstretch at a time when we are fighting in two different theatres.
	Thirdly, will the Minister see what he can do to try to improve on the Ministry of Defence's dismal performance in respect of telling the story of the astonishing achievements and activities of British troops on operations? The continual bleating about nobody knowing what the Army is doing on operations is entirely the fault of the structures to promote such stories. There is no reason on earth why well informed, well told stories that give away nothing, but enable people here to get some comprehension of the astonishing challenges and remarkable achievements of our troops, should not be told. It is incumbent on Ministers to review the situation and see what they can do to drive it forward. At the Ministry of Defence, in both military and civilian bureaucracies, there is a sort of leaden resolve to say no to everything. I urge the Minister to improve on that.
	Fourthly, I should like to make the general point that now is no time to reorganise the head office of the Ministry of Defence, although I understand that that is to take place under the Cabinet Office changes. Doing such a thing is madness when we are operating at war in two theatres—one very, very demanding and the other just very demanding. It is folly to take our eye off the ball because of such a major change at the very top of the Ministry of Defence.
	Next, I want to raise a question that I know my hon. Friend the Member for Aldershot (Mr. Howarth), who knows so much about such matters, will also raise. It is about the treatment of the Defence Export Services Organisation, which was raised by my hon. Friend the Member for Woodspring (Dr. Fox). As my hon. Friend the Member for Aldershot wrote in an admirable letter to  The Daily Telegraph, it is extraordinary that
	"just 10 days before scrapping it, the Government placed an advertisement in a Sunday newspaper for a new head of the DESO, under the job description: 'This is a vital role supporting defence objectives and contributing to wider national interests.' "
	Scrapping DESO is an act of bovine stupidity, engineered by some communist woman at the Treasury, I understand, who decided that it would be in the interests of the United Kingdom to do away with one of the most effective organisations in this country for promoting British commercial interests. When I was a Minister in the Ministry of Defence, I worked alongside two DESO chief executives and I have only the highest admiration and regard for everyone in that organisation, which has done so much to raise this country's defence export sales. Our defence products are admired all over the world and are a very important part of our commercial life.
	Next, the hon. Member for North Devon (Nick Harvey) was right to say that the real increase in defence spending is about 1.5 per cent. year on year. It is futile for the Government to keep asking Conservative Members, "What would you do?" We are not in government: we will have to deal with such questions when we are in government, but military funding cannot remain at the current low level when we are fighting two wars. We are doing that on a peacetime budget, but Ministers must understand that the result is that there has been a split in the armed forces. I have never known such bitterness and inter-service rivalry as exists now in our armed forces. The three services are having to fight for the very poor assets that are available, and I believe that the chiefs must be feeling the strain very seriously. All that is happening at a time when we can least afford it.
	I shall end with two brief points. The first is that we cannot fight the wars that we are fighting unless the money available to meet the here-and-now requirements of our forces is increased. For instance, we urgently need more helicopters. There is no argument about that, and I was delighted by the Prime Minister's announcement yesterday that, not before time, an order was to be placed for 140 Mastiff patrol vehicles.
	In that regard, I should like to congratulate my hon. Friend the Member for Congleton (Ann Winterton) on doing so much to bring home to colleagues in the House how serious is the problem of the lack of protection available to our soldiers. Some of the hazards that they face are very grave. The vehicles referred to yesterday by the Prime Minister should have been ordered at least 18 months ago and, although I am pleased that the order has been made, we cannot afford to put our entire future capability at risk. That means that we must pay for the wars that we fight in a realistic way.
	Finally, may I make a suggestion to the Minister? It is probably somewhat outside today's discussion, but in my view it is essential that the next Chief of the Defence Staff is not chosen from among a group of nominees put forward by each service in a manner that, as it were, resembles Buggins's turn. I believe that the next CDS should be chosen from the entire pool of four-star officers in all three services, as that would broaden the talent pool in a way that is very important in today's armed forces.

Michael Jack: It is always a pleasure to follow my hon. Friend the Member for Mid-Sussex (Mr. Soames), who speaks with inimitable knowledge, determination and commitment. His remarks stand in stark contrast to those of the Minister, who said that he had waited four years to speak. We might have had a more coherent presentation of the Government's procurement policy if he had waited a little longer. He meandered through a sort of shopping list of what was being bought but, as the hon. Member for North Devon (Nick Harvey) noted, without any sort of context.
	I mention that because, when I speak in these debates, I normally launch straight into a series of points relating to the aerospace industry and to the BAE Systems plant at Wharton in my constituency. However, the importance of identifying the threats that face us and, therefore, what we should procure to deal with them was brought home to me when I spoke recently to officers from 2nd Battalion the Rifles. They had recently returned from Iraq, and they told me that what had struck them was the paucity of the basics.
	For example, when those officers left Iraq, the tourniquets used by soldiers to treat field injuries had to be handed in, and they described how a man held a box for their collection. One officer told me that his body armour, sweaty after six months of brave service, also had to be handed in so that somebody else could use it. If equipment is to be handed on in that way—it is almost like hot-bedding—it is clear that something is wrong, and that there are serious pressures on some of the basics. When one speaks to brave soldiers who have faced sophisticated roadside bombs which might have emanated from countries such as Iran, one wonders why the Government have said nothing about the investment made in defence technologies aimed at dealing with that very real threat to our soldiers every hour of every day.
	The debate will be the poorer for the lack of a wider context for the shopping list enunciated by the Minister, because we must be certain that we have got our procurement priorities right. The programmes are very long term, but the correct balance must be struck between the short-term interests of the infantry soldier on the ground and the longer-term strategic interests of force deployment and the ability to provide minute-by-minute air defence capability. The importance of that capability was demonstrated by the recent resumption of Russian military flights over the UK.
	I turn to an article published in the October edition of the magazine Aerospace International . It said:
	"To bolster his military, President Putin has announced plans to boost...military spending with a $200 billion injection up to 2015."
	All of a sudden, the sleeping giant that was the Soviet Union has been reincarnated by the arrival of petrochemical funding in Russia. It is worth looking at the sort of equipment produced there, as it includes the SU35—an aircraft that is not dissimilar to the joint strike fighter. The same article says that an element of commercialism is creeping into the Russian aerospace industry, which is using its export arm to develop markets for affordable but high-performance modern aircraft. Those markets include India, and one cannot but wonder what we might be up against if such equipment were to be deployed.

Lindsay Hoyle: The right hon. Gentleman is right to say that India is looking for aerospace technology. In fact, it is already building the Hawk aircraft, and it is still building Jaguars. Britain is one of the countries in the fly-offs to provide the future needs of the Indian air force. Does he agree that hon. Members of all parties should do everything in their power to support BAE Systems' Typhoon aircraft, and to ensure that India looks to BAE Systems for its future needs, rather than to Russia?

Michael Jack: I am grateful to the hon. Gentleman, who makes an excellent case for retaining DESO, as that organisation would be an ideal vehicle for such a sales pitch. I suggest that he reads the magazine article to which I have referred, as it will expand his understanding and education by demonstrating exactly what we are up against. We are in a highly competitive world, and it sends a shiver down my spine to discover that the Russian aerospace industry once again is trying to compete for the sort of business that we want to secure. In addition, the same article suggests that the Russians are trying to develop stealth capability.

Kevan Jones: Will the right hon. Gentleman give way?

Lindsay Hoyle: Will the right hon. Gentleman give way once more?

Michael Jack: I will give way to the hon. Member for North Durham (Mr. Jones).

Kevan Jones: I am very interested in what the right hon. Gentleman is saying, and I agree that the aerospace market is very competitive, given the threat posed by the former Soviet Union. However, does not that mean that the Government have to set priorities for where investment is made? I support what he has said about the Eurofighter, but I also recall that the hon. Member for Aldershot (Mr. Howarth), who is now sitting on the Opposition Front Bench, went to work as a promoter of the Soviet aircraft industry when he lost his seat in 1990.

Michael Jack: My point is that, all of a sudden, a resurgent Russia has rejoined the competitive arena for aerospace contracts of a military nature. It is important that we do not forget that as we consider these matters. I want to move on now to some specific questions.

Lindsay Hoyle: Will the right hon. Gentleman give way?

Gerald Howarth: Will my right hon. Friend give way?

Michael Jack: I will not give way, because time is against me and I want to proceed to ask some important questions on behalf of the aerospace workers in my constituency.
	Naturally, I am delighted that Saudi Arabia has maintained its strong links with the United Kingdom, with the signing of the deal for 72 Eurofighter Typhoons. The Minister did not mention the closer working relationship between the Saudi Arabian and United Kingdom aerospace industries, not just on development of Typhoons but on other air systems and perhaps in other areas of mutual defence interest. I regard that as very important. My first question is whether, against a background still of Government silence on tranche 3 of the Eurofighter Typhoon, the 72 aircraft will be net extra to the project or a trade-off between those aircraft which the United Kingdom have already decided to buy within the envelope of an overall purchase of 232. There seems to be a great deal of speculation on exactly what is happening with the third tranche of the Eurofighter Typhoon. I accept that a final decision will not have to be taken for probably another 12 months, but it would be helpful if the Minister could say something about the process to determine just how many of those aircraft will be bought.
	Reports in  Jane's Defence Weekly have indicated that all partners in the Eurofighter consortium have begun consultations on the implications for the project of reductions in the overall number of aircraft. Those remarks were given further currency by the Chief of the UK Air Staff, Air Chief Marshal Sir Glenn Torpy, when  Jane's reported that he told the magazine
	"that this process would come to fruition in about 18 months as the various national and international procurement processes assessed the options"
	and that
	"He suggested that the UK was considering not buying its full allocation of 88 Tranche 3 aircraft."
	Was the Chief of the Air Staff speaking correctly when he gave that interview to the journalist?
	It would equally be helpful to know what processes were involved in determining the specification of the tranche 3 aircraft. Some strange stories are doing the rounds: that somehow tranche 1 aircraft will be exchanged for tranche 3 in a refurbished form; that tranche 3 will be a more sophisticated version; or that tranche 2 will be upgraded. Confusion reigns. It would be helpful if we had some indication of what is going on. The hon. Member for Chorley (Mr. Hoyle) and I have on a number of occasions pursued the Government's attitude to a marinised version of Eurofighter Typhoon.
	Another major defence project that the Minister fails to go into in any detail is the joint strike fighter. British Aerospace is delighted to have a 10 per cent. work share of the project, but coming from the United States are some concerning stories not just about cost overruns and time delays, which one accepts as par for the course on such a complex project, but about operational failures of the short take-off and vertical landing aircraft, which would effectively be the carrier-borne choice of the United Kingdom Government at the moment.
	The Minister was also silent on whether the Minister for Defence Equipment and Support, Lord Drayson, had seen any signs of the information and technology exchange that should underpin whether we buy any of those aircraft. Lord Drayson made it clear that there was a plan B if the United States did not tangibly open the books to the United Kingdom aerospace industry and the United Kingdom Air Force on an equal basis and share that technology. What progress has been made? Have there been any tangible signs? If not, why not? If not, what does the Minister intend to do about the decisions that ultimately have to be taken about which aircraft are to be deployed on the carrier?
	Again, stories are swirling around—are we to have some joint strike fighters and some Eurofighter Typhoons? I do not know. I should be grateful if the Minister was kind enough to clarify precisely what the situation will be.

Robert Key: He does not know either.

Michael Jack: Perhaps not, but the purpose of the debate is to find out answers to some of these important questions. It is great to see BAE Systems recruiting 1,000 people this year and 1,000 next year of the right skills mix, but those people want to know whether they have a long-term future in the industry and they want answers to these questions, particularly against a background of press reports. A final assembly and check-out facility has been agreed for joint strike fighter with the Italians, when the Government said in the Rand Europe report that they were considering it. Again, they have gone quiet on that.
	As for conventional aircraft, perhaps the Minister could say something about the state of play for Nimrod. The Government announced about a year ago that they were talking about purchasing up to 12 MRA4 maritime patrol aircraft. Certainly, test flying has shown that its capability is much admired, not just in this country but by competitors. However, the Government are vacillating over the three prototype aircraft, notwithstanding the nine that I hope they will buy. The Minister should bear in mind the growing importance of long-range maritime patrol and land-based patrol aircraft. The Nimrod is an ideal solution to both those challenges, and it would be useful to know precisely the Government's position on these matters.
	The Minister glossed over the question of unmanned air vehicles. He seemed surprised when I asked him about the operational capabilities of the HERTI aircraft, which has been deployed in Afghanistan. The Government have, in fairness, provided some £50 million for a demonstrator project from BAE Systems—the Taranis project. I am delighted to hear that, but it would be helpful to know from the Minister some more about the time scale for that project, and whether the demonstrator will lead to more interest in different types of unmanned air vehicles. Without doubt, when one comes to look to the future, it will be important to strike the right balance between manned and unmanned air vehicles in facing the threats before us.
	I started by talking about what was happening in the Russian aerospace industry. One of the concerning points in the defence industrial strategy was a clear statement that for the foreseeable future—the next 20 or 30 years—the United Kingdom Government could not see their way to being involved in any more fast jet project development. Given that competitors are now enhancing their technological capability, perhaps the Minister can say whether the Government plan to review that very definite statement in order to make certain that we do not fall behind in our technological capability.
	My hon. Friend the Member for Woodspring (Dr. Fox) mentioned the lack of specificity by the Government about the sovereign technologies that we need. The reason why we are involved in joint strike fighter is that short take-off and vertical landing capability and our manufacturing capability were the jewels in the aerospace crown that were put on the joint strike fighter table. If we are not involved in major projects in the future, the United Kingdom will develop its technologies, but on a jobbing shop basis. We will no longer be absolutely at the forefront of technological and material development. I should like to hear some reassurance from the Minister that the Government regard in the same way as they do our nuclear capability, our shipbuilding capability and our encryption capability, the capability to be at the forefront of aviation technology. Without those skills, given the importance of air power to meet a range of threats, we will flip backwards and become dependent on other people's technology at a time when we need sovereign capability.

Linda Gilroy: I begin with an apology, or rather an explanation, to those on the Opposition Front Bench. It was no discourtesy that I was absent during the Opposition's opening speech, but defence debates often take place on days when the Select Committee on Defence has commitments. The hon. Member for Salisbury (Robert Key) and I were attending a meeting with the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), to consider an issue that strikes a particularly important chord with all Members who represent defence constituencies: the arrangements for coroners' courts and inquests following the repatriation of bodies from theatres abroad. I congratulate the hon. Member for Salisbury, who may well speak about such matters a little later in the debate—I will leave that to him—on his diligent campaign to bring these matters to the attention of the appropriate Ministers.
	When I last spoke in a defence debate, at the end of April, I concluded by saying that I looked forward to some important procurement matters moving forward in the months ahead, and indeed they have. I make no apology for concentrating on local issues, where we are experiencing a very fast pace of change.
	Locally, the MOD has agreed to Babcock's purchase of DML, which operates our local dockyard, and it has been cleared by the Competition Commission. The terms of business agreements are being cleared: the dotting of the i's and crossing of the t's on the important contract arrangements for the nuclear facility and the Trident contract—an important part of which we operate at Devonport—as well as major contracts to refurbish the Vanguard class submarines. The new owner has been broadly, if somewhat cautiously—as is our way in Plymouth—welcomed. A British company is involved, rather than the rather distant American ownership that we previously experienced. Babcock has formed Babcock Marine, the headquarters of which will be based in Plymouth. We look forward to working with the company, and we hope that, having acquired the significant additional base of Devonport, it will be able to use the new arrangements as a springboard to become a major marine defence company in the United Kingdom.
	The dockyard and the naval base activities are closely linked, and we were very pleased with the outcome of the review, which found a role for all three bases. The Minister and members of the Defence Committee are certainly familiar with the peaks and troughs of submarine maintenance work in Plymouth. The investment of £150 million in the nuclear infrastructure to meet, quite rightly, the ever more stringent safety case and to enable those involved to undertake decommissioning work on the older classes of submarine was also very welcome and certainly answered some of the great concerns that we have expressed over recent years. Nevertheless, there will still be some challenges for the new company. The base porting of ships at Devonport remains a very important issue, on which we hope to get some clarification in the near future. If there is one issue on which the Minister's clarification would be appreciated, it is that there will be no further haemorrhaging of Devonport's role as a base port for ships in service.
	My right hon. Friend the Minister for the Armed Forces visited Plymouth last week. From discussions that I and the other Plymouth MPs—my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck) and the hon. Member for South-West Devon (Mr. Streeter)—had with him, I know that he is familiar with those arguments and, indeed, will meet all three of us again tomorrow to continue the discussion. From his participation in the Thursday war, I am sure that he will have seen for himself that there is far less congestion in Plymouth than there is in the busy Portsmouth facilities. Nevertheless, we have the capacity to offer significant savings to the naval base review budget, especially through the innovative land release model that is under discussion.
	In his statement on the naval base review, my right hon. Friend the Secretary of State for Defence told the hon. Member for South-West Devon that there would be no further salami slicing of naval base activities and issues. As chair of the strategy group that has been looking at the work load issues, the change in ownership and the naval base review since December 2005, I want to tell my hon. Friend the Minister how important we consider it to be to conclude the work that we began during the naval base review and to state clearly the comparative socio-economic impacts of a reduction in activities at the different naval bases on the savings that will need to be made.
	Before leaving local issues, I want to mention two matters to do with filling those important troughs and helping us to maintain the skills base at Devonport. First, the recent £30 million work package for HMS Ocean is certainly welcome, although of course we look forward to more of the allocated non-competitive work load coming our way. We have also become used to filling those troughs with luxury yacht work. I think that a keel was laid at Appledore in north Devon only yesterday morning—something that will be very welcome to the hon. Member for North Devon (Nick Harvey)—and rail rolling stock is also being refurbished.
	We were all a little taken aback in Plymouth recently by the £30 million contract to build new military vehicles, which my right hon. Friend the Minister mentioned in his opening speech. That will take a little bit of getting used to in Plymouth, which has been so strongly identified as a naval port for many years, but we hope that it heralds further contracts coming Devonport's way from that very big—I think that it is worth £16 billion—programme of FRES vehicles, albeit perhaps not all of it. That would be a little greedy, but if we can perform with the skill for which the Devonport work force are so well known and deliver value for money, on time and to the right quality, Plymouth might well become known for that in future years—as well as for its very strong association with naval matters.
	In the last defence debate, I spoke about increased investment in Defence Estates and single living accommodation, including Project Armada in Devonport, and improvements to service family properties. Since then, the Defence Committee has produced a report on the issue, and as part of our ongoing work we will look closely at the Government's response to the serious issues about the pace of change that we raised in our report. The investment announced in the Chancellor's statement earlier today is very welcome, but it is clear from our report that change and investment are greatly needed if we are to achieve the standard of accommodation that we would wish for all our service families within the foreseeable future.
	A number of hon. Members mentioned helicopters. The new Merlins were mentioned in a recent press report, and we were told earlier this year that they would be available within a year. Lord Drayson visited those involved with the helicopters, which we hope will soon be available. As other hon. Members said, we need to make much more progress on helicopters.
	I am sure that progress at strategic level will form a significant part of the Defence Committee's ongoing work in the current and forthcoming Sessions. We will consider the lessons of the urgent operational requirements, particularly in respect of the defence industrial strategy. The right hon. Member for Fylde (Mr. Jack) expressed concern about whether the priorities were being configured correctly. I am not sure how welcome he would have found the remarks that the Chief of the General Staff, General Sir Richard Dannatt, made in his speech to the Royal United Services Institute in September. The key points that he attempted to lay before us, which will no doubt preoccupy us as we approach the forthcoming defence industrial strategy, is that basic equipment procurement has suffered as the UK has focused on the acquisition of advanced technologies, and that, as we heard in the Minister's opening remarks, the urgent operational requirements process, on which we now spend £2 billion, has been instrumental in developing forces and their equipment.
	General Sir Richard Dannatt made some very strong points in that speech, which I commend to all Members who follow defence issues closely and who have not yet picked up on it. It is in the very good briefing that the Library produced for this debate. He would like us to spend more money on getting things right at the very lowest levels. He talked at considerable length about the great improvements that have been made, and not only in respect of the Mastiff vehicles. He particularly referred to the role of dismounted close-combat units. He compared the infantry unit of two years ago to one of today, and said that people
	"would be surprised at the difference between personal equipment, weapons vehicles and overall capability".
	We must be careful, in our comments about deficiencies—which, no doubt, are there—to bear it in mind that things are changing very fast, particularly with the significant investment that is being made in urgent operational requirements in response to what people on the ground find necessary.
	We are experiencing continuous change in the culture of researching and developing new equipment, but there are also ongoing, major procurement changes to the partnership between industry and Government. The Select Committee will shortly return to consider the progress that has been made since the first defence industrial strategy, which of our recommendations have been taken up, the need to invest substantially in research and development if we are to keep ahead and are to be in the right place in 20 years' time, and the issue of the small and medium-sized enterprises that the hon. Member for North Devon mentioned. I notice that Christianne Tipping of the Royal United Services Institute, who comments on such matters, says that she is unsure whether that issue is being followed up in the way that we on the Defence Committee would expect, and that the second defence industrial strategy might well suggest that that role needs to be formalised.
	To conclude, I should like to say how much we welcome the work that Lord Drayson has done, and to welcome, as others have, the fact that he is still in post. Decisions are still being made, not only about up-front acquisition costs but about through-life cost, and that is one of the most difficult areas of defence procurement to take on. It has been said that it will take a brave individual to follow that through to its conclusion, but I hope that we on the Defence Committee can support those who are trying to do that.

Crispin Blunt: It is a pleasure to follow the hon. Member for Plymouth, Sutton (Linda Gilroy). I hope that she will regard it as a significant compliment when I say that the way in which she represents her constituents' case reminds me very much of our late colleague Rachel Squire, who represented another port. I see that her successor, the hon. Member for Dunfermline, East is here— [Interruption.] I am sorry, I meant the hon. Member for Dunfermline and West Fife (Willie Rennie); he is testament to the electoral benefits that can come about when the Prime Minister assists one's opponent in an electoral campaign. That, I think, was at the time when the hon. Gentleman's party was formally leaderless.
	The debate is extremely timely for me; the battlegroup of my old regiment, the Light Dragoons, has just returned from Afghanistan. I will briefly speak about it, and my remarks on procurement will focus first on the equipment that it currently uses, and then on the equipment that it is supposed to have at some time in the future, which will be drawn from FRES—the future rapid effect system programme.
	I served in the Army for nearly 12 years, and it is humbling for me to talk to colleagues who remained in the Army. I served between 1979 and 1990. The wounds that I got were nearly always the result of being on the wrong end of a cricket ball; it was a rather different age from the one that my former colleagues are now living through in the Army. Indeed, I had to become a special adviser, and then a politician, to find people firing in my general direction. It is humbling to talk to my former colleagues, given what they have just gone through in six months.
	I want to place on record my tribute to Lieutenant-Colonel Angus Watson, who has just brought the Light Dragoons battlegroup back. One of its squadrons, B Squadron, has just over 24 hours left in theatre on operations before it comes back. So far, the Light Dragoons have managed to get through without sustaining a fatality. That in itself is a great achievement. As I have family in the United States army who are serving in Baghdad and in Afghanistan, I know about the thoughts and prayers of everyone who is waiting for their loved ones to come home, and about the anxiety that families go through when their loved ones are deployed on operations. Tragically, Colonel Watson's battle group had six fatalities among members of the other sub-units that were part of his battle group. That is part of the pattern of operations, and it shows the intensity of the operations that we are now dealing with in Afghanistan.
	We should reflect on the quite remarkable achievements of our young men and women on operations; in the case of the Light Dragoons, we are talking about young men. The Playstation generation is doing our country proud. They are 18, 19 and 20-year-old young men, and the calm, unassuming and humane way in which they have conducted themselves while on operations in Afghanistan is a great tribute to them—a tribute that belies their age, and the expectations that even their parents had when their sons went into training with the Army. It is a remarkable achievement. In six months, B Squadron of the Light Dragoons has had 40 contacts with the enemy, and they range from 30 minutes to seven hours in contact with the enemy, including a full replenishment of ammunition in contact. One or two of my hon. Friends who have served in the Army, including my hon. Friend the Member for Mid-Sussex (Mr. Soames), will have some idea of what that means. What we have expected of them is remarkable.
	I am delighted that Breckland district council decided, before the request came from the chief of general staff, to invite the Light Dragoons to parade in a month's time. That small gesture from a local authority means a great deal to the regiments coming home; it shows that their contribution has been recognised.
	We should not confuse our admiration for the magnificent way in which our young soldiers are carrying out their duties with a consideration of the wider merits of their task. It remains our duty constantly to assess whether the task that they are doing collectively on behalf of the United Kingdom serves British interests, and wider western liberal democratic national interests. That is a matter that we must constantly keep under review, and we should never confuse the fact that our soldiers are performing magnificently with the fact that what they are being asked to do might not be wholly helpful to our wider objectives.
	Let me turn my attention to how the CVRT—combat vehicle reconnaissance (tracked)—has done on operations. I recall that when I joined the Army 27 years ago, the vehicles were six or seven years old. They were deployed in the primary role of the British Army of the Rhine, which was there to face our principal threat: invasion of Germany by the Soviet Union and the Warsaw pact countries. In a subsidiary role in Cyprus, where I was posted for six months, we had the delight of travelling around in Ferret scout cars and Saladin armoured cars, and those vehicles were laughably old. They were way older than anyone who was invited to crew them. They were products of the 1950s, but in a sense that did not matter, because that was a subsidiary role for the British Army; the principal question was where the new equipment ought to be.
	Today the CVRT is 34 years old, and it is deployed on our principal operational requirements in Afghanistan. It has undergone a number of updates. In the 1990s, when we acquired the Challenger 2 tank, we were in a ludicrous position. The reconnaissance at the front could not keep up with the armour that was supposed to follow it up, so there was a mid-life update of the CVRT, which resulted in a new diesel engine, suspension and power traverse. I am pleased to say that the urgent operational requirements that became apparent in the Balkans following the tragic loss of Lieutenant Richard Madden—his vehicle hit a mine in Bosnia—have resulted in mine blast protection that has saved the lives of at least two vehicle commanders whose vehicles hit mines in the past six months in Afghanistan. We cannot escape the fact that the CVRT is 34 years old. It is the love and care of the soldiers who man it that sustain it and keep it in the field.

Chris Ruane: Many of the vehicles that the hon. Gentleman mentioned have parts, including optronics and periscopes, that are made in my constituency. He will be aware of the multi-billion-pound upgrading programme that will enable a whole new generation of armoured vehicles to come on line. What help does he think can be given to smaller companies and suppliers in the UK to ensure that they keep their contracts? What capacity building needs to be done by the Department for Innovation, Universities and Skills, as well as by the Ministry of the Defence, to make sure that small providers and suppliers in the UK have a chance to provide in future?

Crispin Blunt: I want to leave that question to the Under-Secretary, because there is an enormous amount of detail about how one should conduct defence procurement and procurement projects in the Ministry of Defence— [ Interruption. ] —much of it extremely well covered by the Defence Committee, as the hon. Member for North Durham (Mr. Jones) suggests. I want to come on to the FRES programme in a moment.
	We should remember that soldiers in Afghanistan are frequently on patrol in those vehicles for 12 hours at a time, then spend all night ensuring that they are ready for action the following morning. Imbalances emerge as vehicles originally designed in the 1950s undergo such development. They have been uparmoured to deal with the threats in Afghanistan 50 years later, and we wonder why the engine, the gear box, suspension and weight ratio no longer work. I understand that there is a significant problem with the gearboxes and suspension in particular, because the thing has got out of balance with the original design of the vehicle.

Ben Wallace: My hon. Friend will not be surprised to hear that the Warrior armoured tracked vehicle has now had 32 urgent operational requirements attached to it, which added almost a third to its width and increased its weight substantially, so a solution is required.

Crispin Blunt: My hon. Friend is entirely right. One of the problems of a vehicle's remaining in service for so long is that, given the number of updates that it undergoes, a basic imbalance emerges between the various parts of the fighting system. I am simply using the CVRT as an example.
	The CVRT will be replaced by FRES. The Minister for the Armed Forces and my hon. Friend the Member for Woodspring (Dr. Fox) both referred to that, and it is only right that they should do so in a debate on defence procurement. FRES is a 3,000-vehicle programme that will cost approximately £14 billion. It is disgraceful that we are having this debate in 2007—I shall come on to the issue of the in-service date in a moment—because as an operations officer of an armoured reconnaissance regiment back in 1988, I was beginning to discuss the shape of the replacement for the CVRT. That was nearly 20 years ago.
	The Defence Committee has done an excellent job in its report on FRES, and I thoroughly enjoyed reading in the record of the evidence the exchange between the hon. Member for North Durham (Mr. Jones) and Sir Peter Spencer on the issue of the in-service date.

Kevan Jones: Does the hon. Gentleman agree that what has changed is the fact that Lord Drayson is determined to ensure that the 2012 date is met? Does he not agree that Lord Drayson should get some credit for trying to force civil servants to home in on that date?

Crispin Blunt: I am glad that the hon. Gentleman is convinced about 2012, because that rather belies the scepticism with which he questioned Sir Peter Spencer. He said:
	"No, I am not asking you that question. That is what they have put in a submission to us...They are the people you have employed to do this work."
	That is a reference to the systems house that is making the assessment and is employed by the MOD. It did not set 2012 as the in-service date; its assessment of the date on which the vehicle would come into service was 2017-18. The hon. Gentleman asked Sir Peter:
	"Are you disagreeing with that?"
	Sir Peter replied: "I am noting it." The hon. Member for Portsmouth, South (Mr. Hancock) said:
	"It is not very helpful, is it?"
	The hon. Member for North Durham said:
	"It is not very helpful."

Chris Ruane: rose—

Crispin Blunt: I will not give way to the hon. Gentleman. He should read the report, because it is a priceless exchange. I commend the hon. Member for North Durham on not losing any of his edge since we served on that Committee together. The people responsible for putting the programme together have told us that it will be ready in 2017. However, in 2003 the Chief of the General Staff gave evidence to the Defence Committee in which he suggested that it would be ready in 2009. Four years later, the programme has slid eight years to the right. At that rate of progress, in four years' time we will be told that the programme will not be ready for another 12 years. All the time, the soldiers of the Light Dragoons—my former colleagues—are invited to continue to fight and work with the CVRT system in service. We owe them a great deal better than that, and I sincerely hope that the Department can address that. I have no confidence, however, that that will be the case.
	This is an enormous programme, and the whole future of the Army is bet on it. If we cannot put our Army in the field with the 3,000 vehicles that will be produced as a result, we are in trouble as a country. What is the context in which the Department was invited to fund the programme? The MOD has a budget settlement of 1.5 per cent. in real terms, which was produced at the same time as the Defence Secretary came to the House to trumpet the acquisition of aircraft carriers and the aircraft that will go on them. If I remember the exchange at the time, he was not prepared to put a price on the whole programme, but what is absolutely clear to anyone who understands even a limited amount about defence economics is that the current position is completely unsustainable.
	The Government came to office in 1997. In 1998, after a strategic defence review, the then Chancellor of the Exchequer wanted to take £1 billion a year out of the defence programme. That was reduced, after the intervention of the Chief of the Defence Staff, to £0.5 billion a year. In the charming way in which the now Prime Minister counts these things, £4.5 has been stripped from the defence budget as a result of that decision in 1998. It does not behove Ministers—I cite the Minister for the Armed Forces as yet another example—to criticise the Conservatives for their defence expenditure. Those Ministers inherited the defence expenditure plans of the Conservative Government in 1997, and they chose to cut that budget. Since then, they have been driven by operational requirements that have smashed any set of defence assumptions made in 1998.
	Ten years later, the armed forces are exhausted, and warrant officers do not take up commissions in regiments, because they do not want to go back to Iraq and Afghanistan yet another time. Young NCOs who have got married have been there, got their medal and been through an amount of military contact that puts most second world war veterans in the shade. There is a limit to their endurance, and to the endurance of their equipment. CVRT is one illustration of good kit that has been well maintained by dedicated people. I am sure my former colleagues would want me to put on record a tribute to the Royal Electrical and Mechanical Engineers who are out there fighting alongside them, keeping that equipment in the field and doing a magnificent job in fitter sections alongside the fighting echelon.
	The House votes on the defence estimates, as the hon. Member for Norwich, North (Dr. Gibson) pointed out earlier, and we can put them up if we so wish. We should have a proper debate on whether our defence policy is sustainable with the defence budget, and therefore with the equipment that we are providing to our armed forces. Commitments and capability are not in balance in the burden that we are placing on our soldiers, sailors and airmen. I am familiar with one small example from my former regiment, and I sincerely hope that the Government will attend to the matter immediately.

Willie Rennie: The hon. Member for Reigate (Mr. Blunt) deserves a return of the compliment, but I must correct him on one matter. I represent Dunfermline, west, not Dunfermline, east, but I can assure him and hon. Members on the Labour Benches that Dunfermline, east is on our target list. We are confident that the Prime Minister will be looking for a new job in the near future.
	I am disappointed by the poor turnout for the debate, especially by those who usually barrack me from behind—Members from the Scottish National party. It is a serious matter that those who claim that they can run my country cannot even be bothered to turn up, and that they treat the topic of defence in such a casual manner. It is important that the message goes out to the people of Scotland that the SNP is not a serious party and is not interested in the defence of our country.
	I welcome the Minister for the Armed Forces, who is now absent from his place. He has already been before the Defence Committee, and he was quite a contrast with his predecessor, who is rather like a Scottish terrier. The new Minister is entertaining and authoritative in his approach, and I welcome him to the Front Bench.
	One week before I participated in a visit to Iraq earlier this year, a young man from my constituency passed away serving his country in Iraq. When I returned, I attended his funeral. The fact that a young man could pass away at the age of 21 serving his country brings home to all Members the importance of our job and the seriousness with which we should take defence matters.
	I welcome the Prime Minister's announcement yesterday of a reduction in force levels in Iraq to 2,500 by next spring. That will give relief to our hard-pressed forces. However, I have concerns about the force protection for such a number. We have been advised that a much larger number is required. I would appreciate more information from the MOD about its figures on force protection.
	The logical consequence of withdrawing from Basra palace is that we should withdraw from south-east Iraq altogether because, as the Prime Minister said yesterday, it was only once we withdrew from Basra palace that the situation became calm. We were part of the problem, not part of the solution. The logical conclusion is that we should withdraw from Iraq altogether, which is the position that the Liberal Democrats set out earlier this year. We were ridiculed for it, but the Government now seem to be following that advice. I hope that the Minister and the Prime Minister will reconsider that position.
	Earlier this year, with a dramatic backdrop in Plymouth, the former Prime Minister set out a new vision for the defence of our country. He rightly praised the commitment of our armed forces and sought to differentiate between hard and soft power. He said that the UK had to play an active role in world security. Finally, he said that that
	"will mean increased expenditure on equipment, personnel and the conditions of our armed forces".
	He went on to say that we had to be
	"willing to fight terrorism and pay the cost of that fight wherever it may be".
	I am not sure that the 1.5 per cent. increase in real terms meets that commitment.

Chris Ruane: In 1997, the defence budget was about £22 billion. It has gone up to £37 billion. How much do the Liberal Democrats say it should go up to?

Willie Rennie: The hon. Gentleman will be relieved to hear that we are in not government, but we are not in possession of all the figures, as has been said many times today.  [ Interruption. ] Members may groan, but the Ministry of Defence figures are opaque so it is very difficult to tell exactly where the money is going at any particular time. The most important thing is that we recognise that the Royal United Services Institute estimates that the defence budget is underfunded by £15 billion if it is to match the commitments set out by the former Prime Minister.
	On many occasions I have spoken about the overstretch of our armed forces through commitments in Iraq and Afghanistan. Harmony guidelines are regularly breached for a large proportion of our soldiers. That is exacerbated by poor retention levels and often increases reliance on our reserves. It is a vicious cycle—fewer troops leads to over-use of those troops, which leads to a greater exodus, which leads to a greater reliance on ever-decreasing numbers. Defence planning assumptions have been breached for the past seven years at least. The over-commitment and under-resourcing has a dramatic effect on equipment as well. Little funding for new equipment results in greater reliance on old equipment, which is over-used in Iraq and Afghanistan. Heat and over-use leads to more breakdown, which leads to greater reliance on a smaller pool of equipment, and so on.
	Although additional funding for urgent operational requirements is welcome, especially when it comes directly from the Treasury, the costs of maintaining that equipment in future years will have to be borne by the MOD budget, putting even more pressure on an already tight budget. Constantly shifting equipment programmes to the right and far into the distance is no longer sustainable, especially if the UK is to match the aspirations set out by the former Prime Minister in Plymouth.
	UK defence spending compares well with that of our European partners, but it still does not match the commitments required by our foreign policy. RUSI estimates that current spending should increase from 2 per cent. of gross domestic product to 2. 5 per cent. of GDP to meet the former Prime Minister's objectives. I do not recall hearing the present Prime Minister objecting to the former Prime Minister's remarks in Plymouth. In fact, I remember him endorsing those remarks. If the opposite is the case, I should like to hear it. If not, I should like to see how the Government propose to fill the gap.
	I was surprised that during the Minister's opening remarks, there was not one mention of Trident. After all, earlier this year, the former Prime Minister at the time told us that
	"we cannot put this decision off; we have to take it now."—[ Official Report, 14 March 2007; Vol. 458, c. 280.]
	We were told earlier this year that this will be one of the UK's biggest construction projects, so why was no substantive mention made of it? Where is the report on the great progress that has been made on Trident since then? Why was it so urgent that we had to take the decision earlier this year?

Linda Gilroy: I believe that the hon. Gentleman visited Plymouth with the Select Committee on Defence, so he must surely have understood the urgent need to keep the skills base intact. I invite him to read the  Hansard record of my speech tomorrow.

Willie Rennie: I am well aware of those arguments, but I would have thought that if this were such an important project, the Minister would have gone into great detail about the progress made.

Bob Ainsworth: The hon. Gentleman is right that I did not mention Trident in my remarks. Just a few months ago, there was a White Paper, a three-month consultation and a debate that took a decision on Trident. People are free to say what they like, but I did not think it necessary to comment on that when covering the range of defence procurement, given that the House had commented on it so comprehensively—at least, it had the opportunity to do so.

Willie Rennie: That surprises me, because this will be one of the biggest defence projects for a number of years and there was no mention of it in the Minister's speech. We suspected that the decision was taken more for political reasons: the former Prime Minister wishing to get the decision out of the way before the new Prime Minister came on board, thus keeping his hands clean —[Interruption.] The hon. Member for North Durham (Mr. Jones) suggests that that is exactly the case. I am sure that political imperatives, rather than industrial ones, drove the decision earlier this year.
	I have previously expressed concerns about the support for small businesses in the defence sector. There is an over-reliance on multinationals, which can invest or disinvest in a country at the stroke of a pen. Small and medium-sized enterprises have a role to play, especially at the high-level, innovative end of the market, but many small businesses find it difficult to engage directly with the Ministry of Defence in whatever the contracting arrangements are and they are often unaware of the opportunities. When they take the precious time to discover those opportunities, they find the process extremely complicated and bureaucratic.
	I welcome the encouragement of improved supply chain management of the primes. BAE Systems is one example of improvement in that regard. Adopting a more paternalistic relationship than simply squeezing out every last penny is often a much more constructive and long-term approach. Given the passing of the Defence Diversification Agency, which had evolved into a body that supported small businesses, I would welcome an update on how the Government plan to support the engagement of small businesses in the defence sector. The national health service and the higher education sectors have specialist bodies that engage with small businesses and businesses in general, but what will happen in the defence sector?

Chris Ruane: Will the hon. Gentleman give way?

Willie Rennie: I am sorry, but I will not take any more interventions.
	I understand that the UK may not have the capabilities to meet all our defence needs, but the defence industrial strategy adopts a tone of pessimism and defeatism. Sourcing on an international basis is healthy and will help to deliver value of money to the taxpayer, but the DIS appears to limit itself to exploring the existing capabilities rather than outlining what support and mechanisms can be provided to develop new ones. Our country's economic strategy should be built firmly on skills, science, research and development, and innovation, yet the DIS includes little innovation and more conservatism.
	I have visited the United States twice this year. On both occasions, we lobbied on the hill for the advancing of technology transfer. We had a difficult job in convincing some Congressmen that this did not mean the transfer of jobs to the UK but a partnership that would benefit the armed forces of both countries. I welcome the new treaty that has been signed and the scrutiny in the House. We must ensure that the US understands the importance of this matter to us as well as the benefit to it.
	I hope that Rosyth will be a significant beneficiary of the announcement on aircraft carriers made just before the recess, which was well received in Fife. Rosyth will play an important role in the final commissioning of these massive structures, which will be the biggest and most complex construction projects ever on the Forth, even compared with the iconic Forth bridge. We are looking forward to the massive increase in employment in Fife. Babcock is expected to increase its employee numbers from about 1,200 to 1,800 and other companies will also seek to increase their numbers locally.
	Many issues remain unresolved, some of which I wish to raise today. First, how do we ensure that local people—this point was made earlier by the hon. Member for Glasgow, South-West (Mr. Davidson)—are given the skills fully to exploit the opportunities ahead, so that the effects of this massive project are felt long after the carriers sail down the Forth? I fear that instead of training local people to take these jobs now, companies will simply rely on transitory employees from elsewhere who will move to the next job when this one is complete.
	I am in favour of the free movement of people—I am a liberal—and regard it as healthy rather than as a threat, but I am interested in ensuring that Fife retains a skill base that could be developed and in Fifers being able to take advantage of the opportunities. We are talking not just about a couple of big ships that need to be built, but about a long-term development opportunity for Fife. What are the Government doing to ensure that companies are fully engaged with local colleges and enterprise companies so that longer-term skills development is planned?
	Secondly, I have heard the Minister responsible for defence procurement talk about the possibility of other countries awarding more contracts to UK yards if we get the carriers built on time and within budget. What engagement has there been? After the construction of the carriers, the Type 45 destroyers, the military afloat reach and sustainability project—the feast—there will be a famine. If we simply rely on the MOD orders to fill the books, we will struggle. What plans are there to fill the order books for the yards so that it is not just a boom-and-bust situation for Scottish yards and others? What is the longer-term strategy?
	Thirdly, has the relationship with France been developed in respect of the carriers? We have not heard much about this since the announcement made in July. If so, what will the nature of that relationship be? The hon. Member for Plymouth, Sutton (Linda Gilroy) mentioned the Babcock takeover of Devonport Management Ltd. Having been opponents over the Trident contract, it is good that Rosyth and Devonport are coming together in a constructive partnership. I am sure that they will work better together and will also be a counterbalance to BAE Systems in the shipbuilding and refit industry.
	I wish to return to a point made earlier about the Public Accounts Committee. It found that the MOD's 20 biggest weapons projects are £2.6 billion over budget and a total of 36 years behind schedule—that is six times longer than the second world war. Its report voices concerns about the massive scale of the cost overruns and delays and the MOD's failure to hold staff to account when things go wrong. The report is obviously damning and gives little confidence in the MOD's ability to manage these large projects. How has the Minister responded to this report, and what measures have he and the Department put in place to get things right?

Robert Key: I apologise to the House, to the Minister for the Armed Forces and to my hon. Friend the Member for Woodspring (Dr. Fox) for missing most of the opening speeches. As the hon. Member for Plymouth, Sutton (Linda Gilroy) mentioned, she, the hon. Member for North Durham (Mr. Jones) and I were at a meeting to discuss coroners inquests and that is why we were delayed.
	I decided to change the habit of a lifetime today by not concentrating on specific defence procurement issues that might affect my constituency and instead taking a broader view of defence procurement and why we need to do it at all. I should like to explain why, if I were Prime Minister, I would wish to double the defence budget over 10 years. Of course, that will not happen under any Government, but I should like to explain why we sometimes need to take a step back and think about why we have defence procurement at all. Is it a question of boys' toys or something rather more serious?
	During the summer, I attended the funeral of a distinguished former war correspondent from the second world war, latterly a great expert on Nelson, who was the author of more than 20 books. One of those books was drawn to my attention, and I read it during the recess. This remarkable book, which is called "East and West of Suez: the Retreat from Empire", was written by Tom Pocock in 1986. It talks of the great days of the British Navy and the 1953 Spithead review. He talks about the celebrations that took place:
	"Foremost among them was to be the traditional naval review at Spithead off Portsmouth, when, tricked out with fluttering bunting and burnished brass and to the sound of bugles and saluting guns, the British displayed the realities of power. Two hundred warships of the Royal Navy lay at anchor, including the beautiful battleship  Vanguard and seven aircraft carriers, while three hundred naval aircraft waited at airfields ashore to fly overhead as the royal yacht steamed between the long lines of grey ships."
	He then points out that there was a lot of fighting between the defence chiefs:
	"the Board of Admiralty was demanding a yet more generous share of the defence budget for research and development, aircraft production and ship-building. This brought them into conflict with the Air Council which was bidding for a force of long-range jet-powered bombers to drop the atomic bombs which were now being delivered to the RAF. The air marshals were allowed their bombers, which were to be called the Valiant, the Victor and the Vulcan and, collectively, the V-bombers, but the admirals were disappointed. True, eight aircraft carriers were under construction but work was proceeding slowly on three cruisers, which had been laid down about ten years before, and the Admiralty maintained that at least seventeen were needed."
	Some might say those were the days, but the only reason why those things happened was that the British public—the electors—knew that they needed such a scale of armament and those procurement programmes. We seem to have forgotten all that in the intervening years. We tend to think of high-intensity conflict as a very important subject, but we do not actually think of what is needed. After all, the traditional reasons for going to war have changed dramatically. We are not looking after territorial advantage now, or aiming for territorial expansion. We are not setting up new empires around the world. We are far more interested in acquiring armoured vehicles, guns or aircraft—platforms, as we must now call them—and systems to go with them because we are more interested in homeland defence and security. We are no longer concerned with the threat of invading armies; we are more interested in cyber warfare. Peace enforcement is a crucial part of the operation of the forces, as is guarding against terrorism, and deterring and defeating it.
	However, there is also the matter of our country's need for global trade and travel. That is what we have done for hundreds of years, it is a legacy of empire and Commonwealth, and it is very important today. Owing to the fact that 90 per cent. of our trade is carried out by ship, we need a long reach to protect that trade.

Chris Ruane: Will the hon. Gentleman give way?

Robert Key: No, I shall not give way at this stage.
	We may no longer be quite so concerned with the Spratleys in the South China sea, and perhaps we should turn our attention more to the north-west passage and the implications for trade routes between China, Japan and Europe via the north of Canada resulting from climate change, and the international tensions that are building over that situation. However, we are talking about things that touch the lives of every citizen every day, but they do not realise it.
	There are 16 or 17 Members of Parliament present for this debate, because the Whips have decided that there is not much legislative business and, as usual, have popped in a defence debate. I am very grateful to them for allowing us to have such a debate—it does not happen very often—but the House should be packed on such an occasion and it is not. Whether we are talking about importing Fairtrade bananas from the Windward islands, fridges from China, television sets from Taiwan or cars from Japan, we are talking about the need for a global reach to defend our trade, our standing of living, our quality of life, our influence in the world and the British national interest. That is what is at stake, which is why we still need to procure such very expensive systems. It is why we shall continue for a long time—indeed, for ever—to need an Army, a Navy and an Air Force. There is much loose talk around to the effect that we will not need an Air Force when we have unmanned aerial vehicles. We will. We shall need expertise to operate those platforms whether they are manned or not, and we shall need the Navy because we must have global reach to protect our British interests and our alliances around the world.
	We will need an Army, of course, to help in the defence of the homeland, but also to ensure that we can project our standards of life, our morality and our ethical stance in the world, and so that we can look after humanitarian aid and carry out peace enforcement and peacekeeping as well as high-intensity warfare when the need arises. If we can explain that to the taxpayer—indeed, if we could explain it to the Chancellor of the Exchequer, the shadow Chancellor and the 620 Members of Parliament who are not here—the defence budget might rise up the political agenda, and more people might share my view that, over a 10-year period, we should in the national interest double the defence budget.
	The usual suspects from all parties are debating, with great expertise, the need to hold the Government to account on the issue of particular procurement programmes, but that misses the main point: in a democracy such as ours—an international country—that is at the cutting edge of military capability, we still need to persuade the taxpayer that procurement matters. For people to go to Tesco, the Navy, Army and the Air Force must ensure that all the products can get there and be safe once they do so. It is as simple as that. However, we do not make that effort.
	The Defence Committee has spent six months going to all the major NATO countries—it is off to Georgia and Turkey next week—and they all say that the public are not prepared to pay. The American public are prepared. The British public pay for more than anyone else in Europe, but other nations apparently do not think that that is important. It is important, and we need to convince the taxpayer of that, not by obscure arguments about whether one version of FRES is better than another or about who will win the contract for the next big order, but in relation to where the national, personal and family interests lie in having the best equipment and the best conditions for armed services personnel. If we can argue the case in such a way, the British taxpayer will realise its relevance, and then the Chancellor of the Exchequer and the shadow Chancellor might agree that we should double the defence budget over a 10-year period.

Douglas Carswell: It is a great privilege to follow the hon. Member for Salisbury (Robert Key), who spoke so eloquently. He dwelt on slightly bigger themes, and I shall try to make various points in a similar vein.
	The UK spends £32 billion a year on defence— 2.5 per cent. of our GDP. That might be half the proportion of the mid-1980s, but in gross terms it is the fifth highest such spend in the world. It should be enough to maintain a substantial force, but we struggle. Our defence procurement system is not good at turning tax pounds into the equipment our armed forces need. Bluntly, the UK's defence procurement budget is spent more in the interests of a few privileged defence contractors than it is in the interests of our armed forces. An ineffective Ministry of Defence pays wildly high prices for kit that it suits the contractor to provide. The MOD pays double, or even triple the price, for what are often inferior products. I could talk at length about the catalogue of incompetence, but I shall confine my comments to helicopter procurement.
	Sensibly, a decision was made to buy Apache helicopters, which are a good piece of American kit. However, in order to preserve jobs, or perhaps award large contracts to privileged suppliers, it was decided to assemble them in the UK. The cost of that protectionism has been vast, and is still being paid in Afghanistan today. Our UK-assembled Apaches cost approximately £40 million each—three times what the Israelis paid for theirs. Worse, by not buying directly off the shelf, we have ensured that only a handful of Apaches can serve in Helmand. Parts from the unused fleet in the west country are being cannibalised to keep our few Apaches in Helmand airborne. If we had bought directly from Boeing, we would have more Apaches—more of those decisive, battle-winning weapons—in Afghanistan.
	I say to those who perceive defence procurement as an exercise in job creation rather than war winning that, if we had bought directly from Boeing, we could have given the 755 employees of Agusta £1 million each and still saved £1 billion. As a job preservation scheme, such protectionism was ludicrous.
	Protectionism also explains why our armed forces do not have enough transport helicopters. The Ministry of Defence placed a £1 billion order for the new Lynx at £14 million each. The problem is that they will not be ready for several years. When I was at the air base in Kandahar, I saw an ancient, grounded Lynx, which the new Lynx is supposed to replace. It was designed for the cold war and is simply not operating in Afghanistan as it should. Next to it, I saw row after row of unused United States Black Hawks. They would cost only £6 million each and could be available in months if only we were not so protectionist. Thanks to the Ministry of Defence, we spend twice as much on buying an inferior helicopter, which will not be available for years, from an Italian company. Similar points could be made about Merlin and the Chinook.
	Not only the taxpayer pays the price for that decision. In Iraq and Afghanistan, helicopters save lives. Every helicopter means fewer road journeys, fewer targets for improvised explosive devices, fewer bombed and broken troop carriers and fewer casualties. We pay a high price for the protectionist defence procurement policy.
	Thanks to our relationship with Finmeccanica, we do not have enough helicopters. When Brigadier Ed Butler arrived back from Afghanistan, he was asked what piece of equipment he most needed. "Helicopters", he said. I do not recall his specifying that they had to be built by Finmeccanica.
	The defence industrial strategy claims to be about providing the armed forces with the equipment that they require on time, and at best value for money for the taxpayer, but saying it does not make it so. The defence industrial strategy is based on the flawed premise that we need sovereignty of supply. That is lobbyist speak for, "The defence procurement budget must go to a privileged few." Sovereignty of supply is a superficially attractive argument, but it is idiotic, not patriotic.
	The premise is flawed because one simply cannot buy an exclusively British jet fighter, helicopter or missile; such equipment is too sophisticated. Sovereignty of supply is an argument for protectionism. One might as well argue that the UK needs self-sufficiency in food production. Doubtless it could be done with a massive protectionist effort. Doubtless a case could be made that, if we did not become self-sufficient, we could be starved out. However, most people recognise that that does not wash. For centuries, we have imported food—and provisions for our armed forces.
	In what sense are the privileged few companies from which we are obliged to buy our defence kit British? Is Finmeccanica, maker of the new Lynx, British? Now that BAE has sold off Airbus, in what sense does awarding Airbus the £2.5 billion contract to deliver the A400M transport planes preserve British jobs? With so many contracts outside the UK, why continue to treat BAE as a British company?
	The sovereignty of supply argument is about preserving the privileged status of a tiny handful of defence contractors. The defence industrial strategy is about maintaining a guarantee that some contractors will have a permanent income stream from British taxpayers. It is no surprise that the biggest supporter of the defence industrial strategy is BAE.
	Protectionism and the defence industrial strategy are wrong not because other companies cannot get a fair crack at supplying business but because our armed forces do not get the equipment that they need when they need it. It is not patriotic, but idiotic.
	The farce continues because there is no effective accountability for defence procurement. As an aspect of public policy, it is no longer settled by those whom we can elect at the ballot box. Regardless of which Member of Parliament is the departmental mouthpiece, the defence contractors get the contracts that they want and our armed forces do not get the kit that they need. Civil servants escape censure for monumental inefficiencies; the Member of Parliament who happens to serve as the departmental mouthpiece loyally and faithfully recites the line that Sir Humphrey gives him. Remote officials make the decisions and our armed forces take the rap. No one is accountable and no one is sacked. That is how our defence procurement works today.
	I have tried tabling parliamentary questions about the Ministry of Defence's appalling decisions in the interests of what I believe to be a few select contractors. Sir Humphrey has cited commercial confidentiality to avoid revealing the truth. I know from first-hand conversations with officials that the competitive procurement process for the new Lynx took place in name only. The process was made to fit the outcome. Yet, unlike our armed forces in Afghanistan, senior officials in the Ministry of Defence can simply avoid the consequences of the appalling failure.
	In the House, it has become the Table Office's default setting to refuse to accept questions about BAE and its Saudi dealings, despite the existence of sufficient evidence to warrant such legitimate questions.
	While Members of the legislature are no longer able to hold the Executive to account, a sophisticated lobbying exercise aims at shutting down the debate. How many Members of Parliament who, like me, have taken part in the armed forces parliamentary scheme know that it is funded by the same contractors as the defence industrial strategy privileges? I suspect that the answer is not many, because the armed forces parliamentary scheme refuses to open the books.
	I raised the subject of defence contracts and procurement after my visit to Afghanistan and I was directly pressurised by the organisers of the armed forces parliamentary scheme for asking such questions. Without accountability, the defence industrial strategy will remain unchallenged. Its retention will maintain the near monopoly of BAE and a handful of others. As long as BAE remains the monopoly supplier, we will not get value for money. For all the management consultant speak about smart procurement and through-life contracts, basic economic literacy shows that, in defence as elsewhere, a near monopoly provider means that the buyer gets a poor deal. When there is a constraint on supply, the seller sets the terms of trade.
	Recently, BAE was handed another £124 million contract to build an unmanned aerial vehicle that we should have bought off the shelf. If one is in Helmand and one needs a UAV that works, one does not care where it is built.
	We do not merely need to buy off the shelf; we need to break the monopoly of the few suppliers. If we did that, we might buy the kit that we need instead of waiting until BAE is ready to supply what it is willing to provide. We might supply our armed forces with the best kit available. If we did that, we might well have less outmoded kit—fewer anti-Soviet tanks, less submarine-hunting kit, fewer Eurofighters to defend the skies over the north German plain, fewer old-style frigates ready to take on the communist navy in the north Atlantic—and more of the kit that our armed forces need to fight the wars to which we send them.
	Finally, I salute Lewis Page, the author and journalist, who has grasped what so few Labour Members have understood.

Richard Benyon: It is a great pleasure to follow my hon. Friend the Member for Harwich (Mr. Carswell), whose thoughts and forthright contribution to the debate will doubtless have been heard on the Treasury Bench and in the Civil Service Box.
	Before reaching the main body of my remarks, I want to comment on a theme that my hon. Friend the Member for Reigate (Mr. Blunt) raised in a passionate speech, and put on record my admiration for so many units of our armed forces that have performed so magnificently in Iraq and Afghanistan. I want to pay special tribute to the 4 Rifles Battle Group and Colonel Patrick Sanders, its commanding officer, who gave one of the most moving eulogies on youth when he spoke of the courage and valour that young men and women are showing in theatres today. Many people outside the House do not fully grasp that those people are every bit as brave and courageous as their grandparents and great-grandparents were. We should be proud of that, and it is a theme that my hon. Friend the Member for Mid-Sussex (Mr. Soames) developed.
	I hope that the Minister will take on board the point that my hon. Friend made about the sometimes leaden approach of the Ministry of Defence, particularly by those responsible for the media unit, who sometimes sing a very different tune from, for example, the one that the Minister sang in his welcome words of support for Help for Heroes, a charity of which I shall be honoured to be a trustee. I hope that the Minister will convey his view to those who are sometimes obstructive. I speak from personal experience, as someone who successfully managed to arrange a day out at Newbury races for wounded armed servicemen. I came up against the media unit at the Ministry of Defence and, frankly, I found it pretty obstructive. The unit let the servicemen go, but it was no mean battle.
	I also pay tribute to the mayor of Newbury, who is an excellent man. He has taken up Sir Richard Dannatt's invitation to pay tribute to our local regiment, the Royal Engineers, by giving a reception. His attitude contrasts with that of the leader of Newbury town council, who said that he wanted nothing to do with the occasion because he did not support the war in Iraq. I cannot condemn enough the failure to make the not-too-intellectual leap of separating whatever one might think about our deployments in Afghanistan and Iraq and paying tribute to our armed forces. I hope that the views of the leader of Newbury town council will be treated with the contempt that they deserve.
	The main theme of my speech was also touched upon by my hon. Friend—the extraordinary decision to axe the Defence Export Services Organisation. One of the great success stories in the past 40 years has been the joint working between Government and industry to co-ordinate and support our defence exports. DESO is a child of Labour. It was created by Denis Healey in 1966 and is the envy of the world. It has contributed to our being second to the United States in defence exports. We have to ask not only why the decision was taken, but why it was done in such a cack-handed and arbitrary fashion.
	We know that the decision was taken by the Prime Minister. He produced a statement to Parliament on the day Parliament rose for the summer recess. I have a minute from the DESO team briefing on 29 August, at which the second permanent under-secretary said:
	"The Prime Minister's decision had been unexpected".
	I should say so, when I can show clearly the level of unpreparedness across government, as they sought to cope with a decision that was kept so close to the Prime Minister's inner circle. What consultation took place across the Government when the decision was taken? Was the Secretary of State informed? Was Lord Drayson informed? Was Lord Jones informed—the former Digby Jones, who as the Minister responsible for UK Trade and Investment will, we are led to believe, take responsibility for whatever emerges from the debacle? He has been quoted in the industry press as saying that the decision was bonkers. He needs to convey that clearly to the Prime Minister.
	DESO employs—or did—around 250 people. In defence terms, it costs a paltry £16 million a year and supports and co-ordinates exports worth £500 million to our balance of payments. DESO is the envy of the world and is being copied by countries that want to emulate our success in defence exports. It is worth looking briefly at what exactly happened. The night before the statement was presented to Parliament and the staff at DESO were informed, the permanent under-secretary was summoned to No. 10 Downing street, where the Prime Minister informed him that the decision had been made to axe DESO. The permanent under-secretary informed the outgoing director of DESO, who got the staff together the next morning so that the permanent under-secretary could tell them the bad news. The director of DESO then said the memorable words—I might not be quoting him exactly—"Well, ladies and gentlemen, I think it's time that you went and started looking for jobs". Many of them have: I am told that more than 30—the brightest and the best—have already been employed by companies up and down the country.
	Interestingly, the Ministry of Defence produced an internal question and answer sheet for employees about what the arrangements will be. The answer to the question,
	"Will staff be forced to transfer with their posts to UKTI?"
	was:
	"How UKTI will manage their responsibility for defence trade promotion remains to be decided."
	The answer to
	"Where will the transferred staff be located...?"
	was:
	"To be decided."
	The answer to
	"Where will those who remain in MoD go to, and where will they be located...?"
	was that
	"this will have to be worked out in the implementation planning phase."
	Finally, the answer to
	"Will staff transfer to UKTI on the same terms and conditions as they have now?"
	was, again, that that will have to be
	"worked out during the implementation planning phase."
	So, nobody knows how many people are going to be transferred to the new arrangement, where they will work, under what terms and conditions they will be working or what they will be doing.
	Most importantly—I hope that the Minister really grasps this—the answer to the question,
	"Will there continue to be a role for the military staff?"
	was:
	"To be decided."
	The answer to
	"What will happen to the (Army) Export Support Team?"
	was:
	"Again, to be decided."
	The answer to
	"What will happen to the DESO First Secretaries overseas...?"
	was:
	"To be decided."
	The replies to all those questions show a disgraceful unpreparedness across Government for how an important part of our economy and hundreds and thousands of jobs in this country could be affected.
	Many companies in our constituencies are affected—I am not just talking about the big ones such as BAE Systems, but small companies that might have to go abroad to an area that they do not know. The first port of call for such companies will be the mission, where they will find the DESO representative. He will say to them, "Right, this is the environment you need to be aware of, these are the people you need to talk to, this is how we do business in this country." The customers out there will want to know that those companies have the imprimatur of the Government. In particular, they will want to see uniformed service personnel involved in the negotiations for contracts, yet we do not even know what is going to happen to those uniformed personnel.
	It is also worth considering what the effect has been in the industry. I have a letter to the Prime Minister from Mike Turner, the chief executive of BAE Systems, in which he expresses his great disappointment about
	"the complete lack of consultation with the industry stakeholders."
	In a telling remark, he continues:
	"I can think of no benefit that 'synergy' with UK T and I can offer that can begin to outweigh the lost excellence of the DESO operation."
	The chief executive of Thales wrote:
	"The link that DESO has provided, both in practical terms and symbolically, with MoD and the Armed Forces has been an important part of the defence side of that export success story."
	It is now gone—finished.
	The most telling letter to come into my hands was from the high commissioner to Australia—someone well known to this Government—Mrs. Helen Liddell. In her letter to Lord Jones—Digby Jones—she clearly sets out the value of the operation run from the missions and how it works in countries that purchase defence goods from Britain. She says:
	"It takes a particular level of experience and knowledge to discuss in detail the kind of kit we sell with men and women who are likely to be commanders in the field. To be blunt, what Australia buys is a relationship".
	I believe that this Prime Minister has put that relationship in jeopardy. Mrs. Liddell finishes her letter by saying:
	"Incidentally, Australia is currently setting up their own version of DESO, and we hear that France is likely to go the same way!"
	We need to see the replies to those letters, from the Prime Minister and from Lord Jones, and the replies need to be public documents because they relate directly to the decision that the Prime Minister took.
	Why did the Prime Minister take that decision? Was it to appease a group of MPs for whom defence exports are an evil? I would love to have the time to debate that issue with them here and now, but I do not. One of the rumours going round Whitehall is that it was to appease an individual or a group of individuals in his inner circle. I would suggest, however, that this was a typical new Labour cock-up: there are a few negatives out there, BAE Systems and the al-Yamamah project—what shall we do? We should do something dramatic, then we can park it. If anyone raises defence exports, we can say, "Look, this is what we've done." Of course, al-Yamamah and anything else to do with Saudi Arabia is dealt with by the MOD Saudi Arabia project; it has nothing to do with DESO. But that does not matter; it is on the spin grid, and the Government have something that they can say.
	Then the Government had to row back, and to create a new environment with UK Trade and Investment. We are losing expertise from DESO and losing respect from customers elsewhere in the world. There are questions that need to be answered. Which Ministers were informed of this decision, and when? Why was there no consultation with the industry? Why was there no preparedness across Government on this important issue? The replies to those questions should be put in the public domain.
	I shall conclude by quoting  Jane's Defence Weekly of 15 August. The very cutting article entitled "UK could pay a high price for cost cutting" stated that
	"it is a bad decision and one that will...severely damage the UK and particularly the one remaining export-led industry where the nation can be considered an international leader and hold its head high. One thing is for certain: the Australian, French, German, Israeli, Russian and US governments that are seeking to emulate DESO's success will be delighted by the Brown announcement."
	I could not have put it better myself.

Ben Wallace: I start by paying tribute to the armed forces who, as we speak in today's debate, are serving on Britain's behalf across the world. No one has any idea of the level of operations that they are engaged in today; it is probably a level that has not been seen since the second world war. That has a tremendous impact on the lives of the individual soldiers and their families, on their equipment, and, indeed, on the collective psyche of the armed forces. We should not underestimate that what they are doing now—whether it all finishes next year in Iraq or whether it finishes in Afghanistan in 10 years—will live with us for decades to come. It will live with us in their families, and in the equipment that we will have to replace. It will also live with the taxpayer and the electorate; as my hon. Friend the Member for Salisbury (Robert Key) rightly pointed out, they will have to recognise and contribute to this effort, through the ballot box perhaps, as part of the responsibility that they hold towards our armed forces.
	It is absolutely right that we should have this debate today. Defence procurement is always an ongoing subject, and we should not push it aside and make it an add-on to the Ministry of Defence. If we get it wrong, it can shape our military doctrine for the future—rightly or wrongly—and leave many of our troops with the wrong equipment in the wrong place.
	Defence procurement is a misunderstood subject. It often gets a bad press, involving the use of terms such as "overspend" and "late delivery". However, the story of the small defence contracts and procurement processes going on every day—whether through urgent operational requirements or planned projects—that are delivered on time and on budget, and greatly welcomed by our armed forces, often goes untold. Yes, the large projects get a bad press. However, I was the overseas director of QinetiQ before coming into the House, and a soldier before that, and in my experience, delays in defence procurement are often the fault of the politicians of the day interfering because they feel that something needs to change, or of a strategic defence review of the threat to our forces resulting in the doctrine changing direction. Those factors inevitably have a cost impact. We should remember that they often arise for the right reasons, but they do cost money.
	The other thing is that we need to lance a few of the boils that we hear about in connection with defence procurement. One is obviously the great "off the shelf" argument that my hon. Friend the Member for Harwich (Mr. Carswell) referred to. According to that argument, it is easy to nip down to Battersea heliport and procure a few helicopters for our armed forces. However, procuring a helicopter from wherever we can get it is of course not the whole story. In fact, it is probably only about 10 per cent. of the story. First, we have to see whether the helicopter can actually take the weapons systems that we want to put on it to protect it. Then we have to ensure that the helicopter has the guidance systems suitable for the interoperability needs of our armed forces. There is no point putting on to a helicopter a compass or a radar system that is fit for the armed forces of the US, the Australians or the Germans.
	There is an interesting anecdote here. The US exported a number of F-22s to be stationed and used in Japan. The problem was that the GPS system did not recognise the international dateline, so half way through flying across the Pacific to get to Japan, the planes had to turn back and have the whole system reprogrammed. We have to ensure that our equipment fits our needs and our doctrines. We have to recognise that helicopters bought off the shelf might not fit the configuration of our platoons, which might carry more or less equipment than the host nation from which we buy the helicopters. The deployment of our soldiers into more hostile areas may mean that our helicopters need more protection. That takes time.
	In the case of the Apache, for example, it is totally misleading to say that if we were to buy from the US, all would be well. Let us remember that we buy from other countries and we wait in line. Why should the US say, "Oh, don't worry, UK, you can jump the queue with the Apaches"? Just tell the US marine corps, a much larger customer, that it can wait for its 500 helicopters! We would probably be told to come back in two or three years.

Ann Winterton: This is not about helicopters; it is about the delivery of the Mastiff. I suspect that the US has ordered nearly 3,000 of them, yet we are going to get ours fairly quickly, as we did with the previous 100. Sometimes it is possible to reach an accommodation in order to jump the queue.

Ben Wallace: I am grateful, but my understanding of the Mastiff project is that it has been delivered because we put some of the assembly and final production in the UK. My hon. Friend the Member for Harwich objected earlier that we should not manufacture or produce in the UK unless necessary. Mastiff has been a successful procurement, delivered on time, but that was partly because the US had the force level required at the time in Afghanistan.
	Another example is the FRES programme. Production of serious and complicated large bits of equipment does not happen every day. Production lines are not running all the time all over the world, churning out armoured personnel carriers. In fact, I believe that at the moment there are only two production lines in the west where armoured vehicles are being made. One is in Switzerland—General Dynamics—and there is another plant in Canada. The Vickers plant in Newcastle is not doing that job.
	This is not like buying a mini or a car from Volkswagen. There are no production lines that just carry on through the years and the decades. They come together, produce the order, and very often, if the export sales cannot be found, they stop. People should remember that when they say, "We don't need a FRES. Let's just buy them off the shelf." There are only two production lines capable of producing what we want; they are not in our possession at the moment and we do not have the ability to deliver. Secondly, there are no alternatives to what we want to fit into our military doctrine, so pulling off the shelf would not solve that problem. If we do not sometimes—not necessarily always—develop and make our own weapons systems, we do not have the ability to resell them or to generate income to share the development costs and perhaps profit from them. One of the most successful artillery pieces in the world is made by BAE Systems in Barrow. The British do not buy it, but it is incredibly profitable because it spreads the cost across the world. Should we decide to buy it, the unit cost would be very cheap.
	What is more, our defence no longer uses the technology of 1945; its technology is highly complex. One of the reasons why we have smaller forces is the punch that our platforms can now give. They need source codes, for example, and the ability to service and upgrade throughout their lives. That means that we need control. Those who buy off the shelf may get their equipment cheap up-front, but the equipment must last for 30 or 40 years, and when it comes to an urgent operational requirement, Boeing will be waiting with a big fat invoice, and we will not have a skills base.
	It is misleading to suggest that security of supply is protectionism. I am slightly older than I look, and I remember when the Belgians did not want to give us ammunition during the 1982 Falklands conflict.

Gerald Howarth: The Belgians refused to sell us ammunition.

Ben Wallace: I think we might have learnt our lesson: the Belgians would never really come to our rescue.
	Security of supply is not protectionism, although of course protectionism exists. It is important to national security—and yes, jobs are important. Defence procurement, and Government procurement, are not a fantasy or dream of the capitalist world, because there is not a level playing field in most countries. As overseas director at QinetiQ, I regularly came up against other European or United States defence contractors. I can tell the House that the British defence market is the most open, probably the most transparent and probably the fairest in the world—and we do not get much thanks for that from our competitors. If we let it all go, we will have very little security of supply and very little ability to develop our own way of thinking.
	People say that we will all be allies together. Will we? We have already diverged from a number of our European allies, in the most recent Iraq war. We should not forget that countries such as China and Iran that could become our rivals—I think that a more civilised term than "enemies"—are procuring and spending as if there were no tomorrow. We must always anticipate whatever threats are around the corner.
	The reason why we can produce the UOR—urgent operations requirement—equipment that saves British lives every day is the skill base that we have here, at home. When people say that it was possible to protect the Warrior from the RPG29 or from some other threat, it generally turns out that it was done by means of a telephone call to some of our engineers in what is often little more than a shed. In the greatest British tradition, the engineers came up with the ideas and the equipment was on the front line within days or weeks. That capability is something that we should not give away.
	I want to record my appreciation of what Lord Drayson has done. I believe that, as a procurement Minister, he has done an awful lot of good in putting Ministry of Defence procurement on the right track. However, I feel that there have been a few weaknesses in today's debate. I was disappointed by the Minister's opening speech. There are many big questions to be answered about the joint strike fighter, the third tranche of Typhoon and the update of the air tanker: where is it? There is also the question of the Defence Export Services Organisation, which my hon. Friend the Member for Newbury (Mr. Benyon) rightly raised. I used DESO in my business. It was excellent, and if we lose that expertise, British defence industry—small or big—will be the worse for it.
	If anyone wants to know the difference between DESO and the DTI, let me explain that in my sector we used to call the DTI "Deter Trade International". Its ability to secure straight answers, quick decisions and a knowledge of the market was as far removed from that of DESO as chalk is from cheese.
	I was amazed that the Minister did not mention the defence trade co-operation treaty. That treaty, between the United Kingdom and the United States, was laid before the House two weeks ago yesterday, and is incredibly important to the United Kingdom defence industry and the United Kingdom and United States armed forces. It is about our sharing with our closest ally technologies that save our soldiers' lives every day. That treaty is sitting on the table, but it has not been mentioned.
	A week and a half ago, I was in Washington to speak to senators and ensure that American protectionism did not block the treaty. My hon. Friend the Member for Harwich has talked of public accountability for defence procurement—and if he wants to see how that can go badly wrong, I suggest that he take a trip to Congress and see how pork-barrel politics often destroys a cohesive defence doctrine in the Pentagon. It is an important lesson. We as politicians and the Ministry of Defence can take long-term defence procurement decisions in the national interest without being too hamstrung by elections every other year.

Crispin Blunt: I understand that we lost the TRACER—tactical reconnaissance armoured combat equipment requirement—programme because a congressional sub-committee put a line through the programme in Congress, against the wishes of the Pentagon. I entirely agree with my hon. Friend about the consequences of doing business with the United States.

Ben Wallace: My hon. Friend is correct. I think that a recent United States defence budget had 9,000 tags, or attachments, when it went through the appropriations committee; members of Congress were deciding that their naval base needed a new set of front gates, and the ejector seat for the new aircraft should be cancelled. That is not the way to go about it.
	We needed some clear answers from the Minister. The debate is about procurement. There were many opportunities for him to update us. The fact that he missed out the defence trade co-operation treaty is important. Inevitably, it will come before the House for a vote. This might have been an opportunity to flag it up. I want to place on record my appreciation of the work of Andrew Radford and the British embassy in Washington. He has done an amazing job in negotiating that treaty with the US State Department. It is a very good document. I hope that the House will support it when it goes through. It is good news for us and for the US.
	I will watch carefully how the hon. Member for Grantham and Stamford (Mr. Davies) votes, given his remarks about the European defence market. Surely he will be against such a treaty. We will watch how his new party welcomes him through the Lobby. We will see how long that view of European defence lasts.
	We could use some good examples from the future rapid effect system about how we need to push forward. I am worried about FRES. It started with a weight requirement of 17 tonnes and the No. 1 priority of being air-mobile and of being able to go back in the A400M. The weight requirement has recently changed: it is now up to 27 tonnes. In our procurement of the A400M, we seek a lift capability of only 26 tonnes. The Germans have gone for 30. Currently, therefore, we could be on course to lose that air mobility. Another thing about FRES could have been clarified. It was supposed to be manufactured in the United Kingdom. That was one of the main issues.
	If the FRES project means that our vehicles can no longer be air-mobile, we may have to get into the realms of answering the question: what will the Conservatives do when it comes to finding money for defence projects? There was the mess of spending £190 million on the TRACER programme and the multi-role armoured vehicle project from 1998. That was just a waste. Two projects—one a United States project and one a European consortium project—have been cancelled, and it has cost the taxpayer £190 million. Perhaps we could talk about the mistakes made with the SA80 rifle, or the brand-new chairs for the MOD headquarters. There are examples within the MOD budget that show a woeful lack of accounting. That could be improved.
	As an ex-guardsman, I know this is minor, but we spend money looking for replacements of bearskins to satisfy one politically correct lobby or another. Most bearskins have lasted for 100 years. We do not need to scout around for artificial replacements at the cost of hundreds of pounds, which we would no doubt have to find elsewhere.
	We were looking for answers today, and I am disappointed that we have not really had them. One answer that I would like from the Minister now is whether we will commit to the blue force tracking programme in the United States, to ensure that friendly fire incidents between our allies and ourselves are minimised as soon as possible.

Ian Davidson: I wish to speak about shipbuilding, the aircraft carrier order and how we proceed from the position that we are in at the moment. I used the opportunity earlier to intervene. I would like the Minister to come back and tell me what steps the MOD intends to take to ensure that the structure of the aircraft carrier ordering programme is devised in such a way that opportunities for subcontracting are maximised, so that local firms in the areas of the yards involved are able to participate. We do not want the subcontract blocks to be so large that local firms cannot tender for work and it therefore has to go abroad.
	Similarly, I hope that the Ministry of Defence will work in Scotland with local colleges and Scottish Enterprise in its various manifestations to ensure that, across the country, adequate training is provided for both adults and youngsters so that we maximise the number of people taken into employment in the shipyards and the subcontracting industries, rather than simply having imported labour. We are worried about the skills shortage in the west and east of Scotland and we do not want the jobs simply to be filled by immigrants from eastern Europe or elsewhere. The Prime Minister has spoken of British jobs for British workers; I want these jobs to go to people who are currently unemployed or under-trained, and we now have an opportunity to focus on achieving that.

Robert Key: What hope is there of the hon. Gentleman achieving that aspiration if the Scottish National party is in control, none of whose Members are present for this major defence debate? It will control what happens in Scotland—and kick out the forces, as far as we can tell. That is a tragedy, and I hope very much that he will persuade his electors to re-elect him.

Ian Davidson: I thank the hon. Gentleman; if I am looking for speakers to support me I might consider inviting him—although, given the Conservatives' record in Scotland, I might hold back from doing so. However, I take his comments in the spirit in which he intended them.
	We will have a robust discussion in Scotland about whether the Scottish nationalist-led Scottish Executive are prepared to put the necessary money into training to ensure that industries such as defence, which depend on the UK Government for their orders, are adequately staffed and provided for. That will be one of the most important political debates in Scotland over the next year or so, and I intend to participate in it. I have done all that I can to ensure that my constituents are aware that the placing of the orders for the aircraft carriers has come about as a result of Scotland's membership of the United Kingdom. My constituents are under no illusions. If there were an independent Scottish navy, it would not be ordering two aircraft carriers on its own.
	Let me return to the thrust of my remarks. The MOD has been working constructively and positively with the shipbuilding industry to try to provide a degree of forward planning to ensure that we avoid the peaks and troughs of demand that have caused such havoc in the lives of many of that industry's work force, who have had to be repeatedly laid off and then rehired. When skilled staff in industries such as shipbuilding get laid off, many of them find other jobs and never return. We cannot simply turn such a labour force on and off like a tap.
	Given that context, I particularly welcome the Government's commitment in principle that the peaks and troughs in the shipbuilding orders for the frigates and aircraft carriers will be evened out by sequencing the placement of the MARS programme—the military afloat reach and sustainability fleet tanker programme—and making sure that it meshes in. I was therefore extremely concerned when representatives of the industry informed me that the MARS commercial manager recently wrote to a number of suppliers suggesting that it was the Government's intention that the fleet tanker programme should be progressed under the EC public procurement regulations. If that were to happen, and if the competition for the fleet tankers were to be open to European companies, it would presumably go to the lowest bidder, and therefore the opportunity that we have to adjust the timing of the flow of work through the shipyards to take account of peaks and troughs would be lost. We ought at the very least to delay that until the forthcoming MARS industry day has taken place on 24 October.
	In the longer term, we should delay the programme until such time as we are able to ascertain exactly what the shipyards' flow of work under the aircraft carrier order will be. As I understand it, simply to issue an advert for the procurement process through the  Official Journal of the European Union would commit us to that process at an early stage. We would not then be able to claw it back.
	I hope that the Minister can clarify an issue for me in this debate, or subsequently by letter; I am not clear about it at the moment. Does the requirement to conduct the programme under EC regulations stem from an assessment by the Ministry of Defence that the vessels are outside the scope of war-like equipments that can be exempted from the EU procurement process under article 296 of the treaties that established the European Union?
	In the past, we have argued that, in some circumstances, vessels should be designated "grey ships" and therefore not have to go down the open procurement route. Given what the specification for the ships is likely to be, it is my view that they clearly fall under that exemption and that the MOD is therefore not required to go for open procurement. As I understand it, the range of military capabilities and standards detailed in article 296 is substantial. There is a classification against Lloyd's register naval ship rules, rather than merchant ship rules. There is a specification about naval helicopter operating, support and maintenance facilities and one in respect of secure military communications systems, which will be in the contract. There will also have to be naval-replenishment-at-sea equipment, and firefighting and security arrangements that exceed merchant navy practice. Similarly, there will have to be manoeuvring, stability and sea-keeping requirements in excess of merchant standards.
	All that makes me believe that it is not necessary for the MOD to go to European open procurement. Also involved will be the ability to transit out of nuclear, biological and chemical contamination areas, having survivability, vulnerability and shock standards in excess of commercial standards and having operating patterns with warships. Such patterns would inevitably put the vessels in harm's way.
	In such circumstances, how can the MOD say that those are not military ships and are eligible to be put out for open procurement? I want the Minister to be clear about whether the MOD has thought through what the consequences of such open ordering might be. If the prime contract were won by a foreign supplier, it is entirely likely that that supplier would use its own supply chain. That would cut directly across the MOD programme to develop British supply chains in shipbuilding and elsewhere. I find it difficult to believe that the MOD would draw up a specification that gave the prime contracting role to a foreign supplier, yet not allow that supplier to choose its own sub-suppliers. If the supply chain were dictated from the United Kingdom, that would be a recipe for chaos, with a different prime supplier not using its normal supply routes. I hope that the Ministry of Defence and the Minister will consider the whole issue again.
	Finally, on behalf of the trade union movement in the yards of my constituency and elsewhere, I pay tribute to the excellent work that Lord Drayson has done. He has established a relationship with the trade unions far better than those of many of his predecessors, largely because he has been consistently open and straightforward with them. They genuinely believe that they can trust him; it has to be said that they are not always happy with what he tells them, but they have always accepted that he is simply giving it to them straight. Similarly, I have found him to be somebody with whom it is a pleasure to deal. As many Members know, when it comes to reform of the House of Lords, I am in favour of the "one Lord, one lamp post" solution. However, I want it made clear that that would not all happen simultaneously and would be done in tranches. Lord Drayson would certainly be towards the end of that queue.
	I hope that the Minister will be able to give me satisfaction on the points that I have made, if not today, then subsequently in writing.

Gerald Howarth: This has been a very interesting debate, with contributions from nine regulars. Seven of them were Opposition Members, and the two from the Government Benches comprised one turncoat and one reservist—the latter being the hon. Member for Glasgow, South-West (Mr. Davidson), who has just spoken. I pay him a warm tribute for the support that he has given to the defence industry, especially shipbuilding. At the risk of damaging his prospects at the next election, I can tell him that I strongly support his line on the euro, a subject about which he and I have privately made common cause.
	My hon. Friend the Member for Salisbury (Robert Key) was right to say that the House should be packed for a debate such as this, as it deals with matters that are vital for all our constituents and for everyone in these islands. It is very disappointing that, although my hon. Friend the shadow Secretary of State for Defence was able to attend, the Secretary of State himself unfortunately was not. I presume that the right hon. Gentleman was attending to a greater priority—that is, looking after the threat posed to Scotland by the Scottish National party.

Ian Davidson: Will the hon. Gentleman give way?

Gerald Howarth: I will, as this may be an opportunity for the hon. Gentleman to save his seat by putting some clear blue water between himself and me.

Ian Davidson: I should regret it very much if this has not been made clear already, but my understanding is that the Secretary of State for Defence is attending another engagement, at which the Army is to receive an award. He thought that that was especially significant, and that is why he was unable to attend the debate.

Gerald Howarth: I am sure that the whole House is grateful to the hon. Gentleman for providing an explanation that was not forthcoming hitherto. Obviously, all of us face enormous calls on our time, and there are always competing claims, but this Prime Minister has said that the House of Commons is the top priority, and it is disappointing that the Secretary of State was not able to be here.
	The time available to me is rather longer than I had anticipated—and I am sure that you, Mr. Deputy Speaker, will chastise me if I stray—but I shall run through some of the points made in the debate. The hon. Member for North Devon (Nick Harvey) said that the procurement programme was likely to move to the right, and I think that he was correct to do so. He also made common cause with my hon. Friend the shadow Secretary of State that greater transparency for Parliament would improve the quality of scrutiny. That theme was evident throughout the debate, and I hope that Ministers will take it on board and see what more can be done to provide the House with greater insight into what goes on—although I am conscious that the National Audit Office and the Defence Select Committee perform a valuable function for all Members of the House, irrespective of party.
	The hon. Member for North Devon also referred to the need for a defence review. I hope that he has read that it is part of our programme that we would hold such a review every five years. The way in which the situation around the world has changed makes holding a regular review of our defence posture something that the House should consider very seriously. However, I can tell the hon. Gentleman that we will also be calling it to the attention of our friends and colleagues that the Liberal Democrats have called for a windfall tax on the defence companies. I am sure that they will be interested to hear about that policy.
	My hon. Friend the Member for Mid-Sussex (Mr. Soames) made one of his characteristically spirited contributions, for which I am the first to salute him. I have served as his deputy in the House, and he is a wonderful man to work for. No one has the interests of the armed services closer to his heart than he—and, my goodness, this House knows that he has a very big heart. He made a number of very good points, especially about the under-reporting of the positive achievements of our armed forces on operations. Something that is gaining common ground on both sides of the Chamber is that members of the armed forces often complain, when we visit them in theatre, that the media do not report the positive things that they are doing. They want to know why that happens, and they will say so even when the media are there with them. The media need to look to their own responsibilities not only to the wider British public but to the armed forces themselves.
	My hon. Friend the Member for Mid-Sussex, like several of my hon. Friends, mentioned the Defence Export Services Organisation. I thought that his description of scrapping it as "bovine stupidity, engineered by some communist woman at the Treasury" was wonderfully politically incorrect, and I endorse it. It was magnificent, and typical of his robust language. I shall come back to DESO in a moment.
	My right hon. Friend the Member for Fylde (Mr. Jack) is a doughty advocate for aerospace in his constituency—not exclusively for BAE Systems, but it has its military aircraft headquarters in his constituency. It is an extremely critical component in Britain's defence capability, and we should pay tribute to it. We should pay tribute to all Britain's defence companies, whether large or small, for the incredible job that they do. We are a small country. We are a fifth of the size of the United States yet, as several of my hon. Friends have pointed out, we are the second largest exporter of defence equipment in the world. We owe that to the professionalism and innovation of our scientists and engineers. Far from decrying them, I pay them the warmest possible tribute. We should acknowledge that not only do they respond swiftly and agilely to demands for upgrading of equipment in theatre, but they have people pretty near the front line, and we should pay tribute to them for that.
	My right hon. Friend also mentioned the importance of unmanned aerial vehicles. Work is going on at Warton, some of which I have seen. It is an extremely interesting area of development which we should encourage and in which Britain has a world-class leading role to play. I strongly support my right hon. Friend when he says that the United Kingdom must continue to be at the forefront of technology. That is something on which we are in accord with the Government, especially with the Minister for Defence Equipment and Support, who has made the point that we will not be a sovereign nation if we cannot autonomously operate our own kit—a point to which I shall come back later.
	The hon. Member for Plymouth, Sutton (Linda Gilroy) is a doughty campaigner for her constituency. We all share her delight that the naval base review rightly decided, as my hon. Friend the Member for Woodspring (Dr. Fox) said at the outset, that there was no case for the closure of any base. I am delighted that that has happened. The Supacat vehicle, which is a superb vehicle, was on display at the defence systems and equipment international exhibition. It is made by an excellent company called Supacat down in Devon. Its managing director is my secretary's nephew and I have visited it a couple of times. I give it a plug because it is a jolly good company. It is a small British company doing a splendid job, and it is not just the big boys that we need to be concerned about.
	My hon. Friend the Member for Reigate (Mr. Blunt), in a feisty speech, paid tribute to his regiment, the Light Dragoons. I have to say that he was slightly modest. I have no doubt that if he were serving today, he would display every bit as much courage and determination as those who are currently serving in the uniform that he was once proud to wear. He has indeed demonstrated some extraordinary politically courageous skills, which perhaps I will not go into any further today, save to say that his military career and bearing have provided the House with some valuable expertise.
	My hon. Friend was right about the CVRT, although it has been upgraded. The upgrade is an interesting one. I have seen it for myself. It illustrates the point that we have to build new equipment that will be in service for a long time and therefore requires the ability right from the outset to be upgraded and adapted for the different conditions that we face today.
	My hon. Friend drew attention to the disgraceful delay in the future rapid effect system programme. He drew attention to the fact that General Sir Mike Jackson had said that it had to be in service by 2009 and is now not likely to be in service until we do not know when. He drew attention to the fascinating exchange in the Defence Committee between the hon. Member for North Durham (Mr. Jones) and Sir Peter Spencer. Of course, that exchange led to the decision by the Ministry of Defence to remove any requirement on the part of the Government to give in-service dates, largely because they were completely incapable of meeting in-service dates. So it was better not to tell the House of Commons or the public the likely in-service dates, otherwise they might have to meet them.

Crispin Blunt: I am very grateful to my hon. Friend for his kind remarks. In-service dates are an issue. The Light Dragoons are under the rather fond illusion that the scout variant of FRES will be in service sometime around 2013 or 2014, but since the utility variant is coming in first and the systems house estimates that that will happen in 2017, someone better tell the Army—the people who will use it—just exactly when that equipment can be expected to come into service.

Gerald Howarth: That is a very good point. Ministers will have heard it, and I hope that they will give the House an answer.
	The hon. Member for Dunfermline and West Fife (Willie Rennie) referred to the absence of the Scottish National party from the debate. That was noted by all sides. He also referred to the need for the aircraft carriers, which we endorse.
	My hon. Friend the Member for Salisbury said that if he were Prime Minister he would double the defence budget, and I look forward to serving under his premiership in those circumstances. I remind him that, in an opinion poll conducted in October last year and published in  The Daily Telegraph, when asked whether we should spend more or less on defence, 46 per cent. of the public said that we should spend more and 22 per cent. said that we should spend less. The House can make up its own mind on that. My hon. Friend said that 90 per cent. of trade is seaborne and therefore that there is a need to protect our trade routes, and he is absolutely right.

Quentin Davies: Will the hon. Gentleman give way?

Gerald Howarth: No, emphatically not.
	My hon. Friend the Member for Harwich (Mr. Carswell) suggested in his slightly idiosyncratic and sometimes slightly bizarre contribution that the whole thing was a conspiracy by a number of defence companies. He probably thinks that I have sold my soul to them, but I represent Farnborough, where the headquarters of BAE Systems is based, and although Lady Thatcher used to say to me, "I hope BAE is still paying you", I have never received a penny piece from BAE in my life.
	My hon. Friend did himself something of a disservice in suggesting that those of us who believe passionately in a strong British defence industry are somehow in hock to those companies, for that was the general purport of what he said, although he had some positive points to make. It is important to BAE to have a strong home base, which has enabled it to become such an effective force in the United States. Without that home base here, it would not have been able to achieve what it has achieved in the United States. His suggestion that we should simply buy off the shelf was effectively refuted by my hon. Friend the Member for Lancaster and Wyre (Mr. Wallace). We would very soon cease to be partners; we would become supplicants. We would get inferior kit at an increased price, and that must be borne in mind.
	I am bound to say on behalf of Sir Neil Thorne that the idea that the armed forces parliamentary scheme is supported by BAE, Rolls-Royce and one or two others to enable them to secure contracts is extremely unworthy of my hon. Friend the Member for Harwich, and he should think very carefully before making such an accusation in the House.
	I am delighted that the reception organised by my hon. Friend the Member for Newbury (Mr. Benyon) for the Royal Engineers went so well. In the same vein, having been instrumental in persuading Rushmoor borough council to put up some fantastic 20 ft banners in Aldershot a couple of weeks ago that said, "Aldershot welcomes home the Grenadier Guards", I should like to see what he has done in Newbury and to tell the House that Aldershot Town football club has tonight opened its doors to the Grenadier Guards and others who have recently returned from operations and invited them to the game against Ebbsfleet—a game that I am sure everyone will rush to watch on the television, as soon as the debate is over—and they are being welcomed in free. That should be done much more often across the country. I will return to the subject of the Defence Export Services Organisation, because my hon. Friend made some important points.
	My hon. Friend the Member for Lancaster and Wyre, like so many of my hon. Friends, brings real expertise to the House. He is not the product of some sort of party political research organisation and the hothouse of politics. As well, of course, as his distinguished record of service in the military, he has been on the front line, fighting for British interests commercially. He made an extremely important speech. I was pleased to be in Washington with him earlier in the summer, where on a cross-party basis with a number of Labour Members we tried to persuade the Americans that our not getting access to the technology for the joint strike fighter would be a potential show-stopper. We must be able to operate that aircraft autonomously. He was right to mention the defence treaty; I hope that the Under-Secretary will refer to that in his winding-up speech, and tell us when it will come before the House.
	Equipment is as important to soldiers, sailors and airmen as pay and accommodation. Why would they feel valued and why should they put their life on the line if those in charge of policy fail to give them proper and sufficient equipment to do the job? The Minister for the Armed Forces listed new projects that have recently been delivered or ordered, and we welcome them, not least the Supacat, which I mentioned, and the Mastiff, which I have seen in operation in theatre, and which is unquestionably a splendid piece of equipment, although it should have been in service much sooner. However, that is the least that should be expected of a Government who have decided to embark on two major military operations simultaneously, exceeding the planning assumptions set out in their strategic defence review of 1998.
	As the then Secretary of State for Defence, the right hon. Member for Ashfield (Mr. Hoon), said in 2003,
	"We have effectively been conducting continual concurrent operations, deploying further afield, to more places, more frequently and with a greater variety of missions than set out in the SDR planning assumptions."
	As my hon. Friend the Member for Woodspring said, we are talking about the Government's position, and their planning assumptions. They knowingly exceeded their planning assumptions by a substantial margin.
	The tempo of operations has meant that through-life cost calculations have been shot to pieces, as kit has been utilised at a far higher rate than expected. There is a shortage of helicopters and of other equipment— shortages to which hon. Friends have drawn attention. The RAF continues to operate old transport aircraft that the Government intend to replace by means of one of the most absurd procurement private finance initiatives yet invented. It is scandalous that the Royal Air Force is no nearer to getting its hands on the future strategic tanker aircraft than it was two and a half years ago, yet the first aircraft was due to be in service this year. The Australians, having straightforwardly purchased the same aeroplane, have theirs in operation today.
	So what has happened? A pattern has developed whereby senior military officers move almost seamlessly from Whitehall to the television studios or—still, thankfully—to the other place to denounce the policies of successive Labour Ministers. Distinguished and experienced officers—Field Marshal Inge, General Guthrie, Admiral Boyce, General Ramsbotham and now General Jackson—have all warned that the armed forces are being short-changed by Labour. Increasingly, such is their frustration that serving officers are forced to speak out. The Chief of the Defence Staff told the Defence Committee that there was
	"not much left in the locker".
	Brigadier Levey from Land Command said in May that "the cupboard is bare". When Sir Alan West, the Government's security Minister, was First Sea Lord, he said in response to Government plans to reduce the Royal Navy's surface fleet to 25:
	"this country needs about 30 destroyers and frigates".
	The Chief of the General Staff, Sir Richard Dannatt, said that vital equipment was being used
	"at the edge of sustainability".
	The Chief of the Air Staff has warned that the RAF is running "very lean", and now we read that they are to lose two squadrons of Tornado strike aircraft.
	Those warnings are being ignored by the Prime Minister, who has for 10 years starved the armed forces of the resources that they need to do the job that he has asked them to undertake. He says that the armed forces have been given what they need by way of urgent operational requirements, but those eventually have to be absorbed into the shrinking defence budget. There was a great fanfare yesterday for the extra 140 Mastiff armoured vehicles, but no extra money, as the Minister for the Armed Forces made clear in his opening speech. Indeed, we know from a memo leaked to  The Sunday Telegraph that the Chief Secretary to the Treasury has directed that
	"no further money from the CSR would be allocated to Defence and to maintain force levels the Dept must find the savings/cuts.
	For the RN, the poor CSR deal and the commitment to 2 carriers is such that a proposal for the immediate decommissioning of 5 ships...from April next year has been considered.
	This would reduce the RN's capabilities to just one small scale operation and that is it."
	The Under-Secretary has a duty to tell the House today whether that memo is accurate.
	In the meantime, in a desperate attempt to show savings, the MOD tried subterfuge, only to be exposed by the Defence Committee chaired by my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot), which revealed that alleged savings of £781 million turned out to be £333 million, with the remaining £448 million transferred to other budgets. That chaotic situation is set against a background where everyone knows that we face an increasingly uncertain world, with Russia engaged in sabre rattling, as my right hon. Friend the Member for Fylde warned, and turning off the energy supplies of those who challenge it. In the meantime, China has invested heavily in building its military capability and rogue states have threatened to acquire lethal long-range weapons. As the Minister of State himself said, who knows what will happen in 10 years' time? This is an uncertain world and defence is the nation's insurance policy, but the Prime Minister is not paying the premium.
	Such is the hand-to-mouth policy that the excellent defence industrial strategy launched by the able and respected Minister for Defence Equipment and Support, Lord Drayson, has run into the MOD sand, and we now have a twin-track procurement policy of cash-unlimited UORs running alongside protracted, unfunded, long-term programmes which may or may not be relevant when they come to fruition. The whole procurement process has failed to adjust to the new world order. As the head of Thales, Mr. Denis Ranque, said to me when I met him in Paris on Thursday, we need to devise a new procurement strategy that reconciles the need for agility in meeting rapidly changing threats with the need for a longer-term programme into which the short-term requirements can fit.
	The real problem is that the stewardship of one of the UK's greatest assets—Her Majesty's armed forces—is in the hands of a man who has no understanding of, let alone empathy for, the armed forces. Why else would he have made the Defence Secretary's job and the Minister of State's job part-time? Why else would he have scrapped the Defence Export Services Organisation, which has helped Britain's defence industry to achieve annual export sales of £5 billion?  [ Interruption. ] The Minister for the Armed Forces is not part-time—I was referring to Lord Drayson: he, too, is a Minister of State, and he is a part-timer. The decision to scrap DESO was made personally by the Prime Minister without any consultation with his Ministers, let alone with industry. It was smuggled out as a written statement two days before the summer recess, thereby denying Parliament the chance to hold Ministers to account, contrary to all those soothing assurances that he gave on taking over from Mr. Blair. That early move graphically confirms the truth of Lord Turnbull's view that the Prime Minister exhibits "sheer Stalinist ruthlessness" and holds his colleagues in
	"more or less complete contempt".
	What an absurdity to announce a consultation after the organisation has been axed—execution first, followed by the trial. I know that Ministers are embarrassed, because they were never consulted. The Minister for the Armed Forces, of course, was not around at the time of that dirty work, but the Under-Secretary was. It was shameful, and it was met with almost universal anger and dismay, not least from Ministers who were consumed with embarrassment at that example of Stalinist ruthlessness, which could only have been undertaken by someone keen to placate those who campaign against defence exports or, indeed, agents of the campaign against the arms trade. As my hon. Friend the Member for Newbury told us, the chief executive of BAE Systems, the world's fourth largest defence contractor, wrote to the Prime Minister on 26 July. Mike Turner rightly praised DESO for providing a world-class capability in Government support for defence that was the envy of our principal competitors, who cannot believe their luck. My hon. Friend also quoted Helen Liddell, a stalwart of the Labour Benches for many years, who said in a letter to Digby Jones:
	"I have a great respect for our Trade and Investment teams but I have to be honest, the skill sets used for general UKTI work do not match at all that needed for defence sales."
	She told Digby Jones that Australia is setting up its "own version of DESO", which is an indictment of the Government. The fact that the Ministry of Defence will retain Saudi business within the Department indicates that that decision is absolutely rotten.
	Now Ministers are trying desperately to cobble together a formula to replace DESO. We await the outcome of that completely needless exercise, and if it fails to provide what we regard as an effective substitute, we shall have no hesitation in undertaking to restore DESO to the MOD after the next election and the return of a Conservative Government.
	There is a widespread view that the current tempo of military operations is unsustainable on the present budget, to which today's announcement makes little practical difference. As my hon. Friend the Member for Woodspring said at the outset of the debate, procurement is a welfare issue. The Government have failed to give our men and women the equipment that they need, demonstrating that they have failed to honour their part of the military covenant. We regret that the Prime Minister's timidity in failing to call a general election will deprive us of the opportunity to take steps immediately to restore the broken covenant, but we shall use the forthcoming months to champion the cause of our brave men and women in uniform, who deserve much better than they are being given by the Government.

Derek Twigg: It is an honour and a privilege for me to work with our armed forces and veterans. I join the rest of the House in paying tribute to their courage, determination and professionalism. We are well aware of their bravery and the task that they are undertaking in Iraq, Afghanistan and elsewhere around the world.
	It is right that the House should scrutinise the current procurement policy and that we should have this debate to look at ways of continuing to improve what we do. Service personnel and taxpayers have a vested interest in procurement, and it is our duty to ensure that we have the right policies and processes in place to help British armed forces.
	The debate was wide ranging and included some very good contributions. We heard from my hon. Friend the Member for Grantham and Stamford (Mr. Davies), the hon. Members for North Devon (Nick Harvey) and for Mid-Sussex (Mr. Soames), the right hon. Member for Fylde (Mr. Jack), my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy), the hon. Members for Reigate (Mr. Blunt), for Dunfermline and West Fife (Willie Rennie), for Salisbury (Robert Key), for Harwich (Mr. Carswell), for Newbury (Mr. Benyon), and for Lancaster and Wyre (Mr. Wallace), and my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). I shall try to deal with as many of the issues raised during the discussion as I can.
	I was surprised that the first item of procurement that was brought up was British lamb. The hon. Member for Leominster (Bill Wiggin) is not present, but I understand that the figure that he quoted is not correct. It is not 3 per cent. of our procurement—13 per cent. of the lamb procured for the armed forces is of British origin and we would like to improve that, but various issues such as availability and price must be taken into account. Where we can source British produce and meat, we will do so.
	As Defence Ministers, my right hon. Friend the Secretary of State and I regularly visit our armed forces personnel in the UK, in operational areas and elsewhere. The hon. Member for North Devon mentioned kit. One of the first questions that we ask our armed forces personnel wherever we are, particularly in Afghanistan and Iraq, which I visited three weeks ago, is what they think of their personal equipment. Perhaps I am hearing a different story from the one the hon. Gentleman hears, but the overwhelming view is not only that it is good, but that it is the best personal kit that they have ever had. That view has been put across to us from all ranks. As Ministers, we want to know if there are problems that we can deal with. From time to time there are issues—we heard about boots, for example—but the message that we get is as I have described it. A great deal of investment has been put into talking to our armed forces personnel about what they need and into the work that has been taking place in the MOD and the armed forces.
	Let me give an example. As the House knows, I have responsibility for Defence Medical Services. When I was out in Camp Bastion a few weeks ago, the message coming across to us from our medics throughout the Defence Medical Services was that the personal equipment that they have, particularly the body armour, is saving lives that would not have been saved just a couple of years ago. That is an important point to make, and I reject the Opposition's accusation that we are not spending to support our armed forces at home and abroad and to give them the best possible protection. I refute that, and I shall return to the issue later.

Liam Fox: One of the consequences of improved body armour is fewer fatalities but a higher number of casualties who survive serious injury. I shall ask the Minister something that I have asked his predecessors about for more than a year. One of those consequences will be an increase in concussion-type injuries resulting in traumatic brain injury. The Americans have already instituted protocols for their servicemen and servicewomen in theatre, but we have not. When will that be done? We are constantly told that the Government will evaluate the information, but it is now some 18 months since this was begun in the United States, so when will we get it for our armed forces?

Derek Twigg: I have told the hon. Gentleman that we are examining this. Let me make it clear that when I was talking about this issue at Headley Court a few months ago, there was a difference of opinion about how it should be addressed. The Americans have a view about how they want to pursue it. We are listening to that and we shall be talking to them—we have a liaison officer out there. It is important that we get the medical opinion right. When we reach a conclusion, we shall make a statement in the House on our approach to this type of injury.
	The hon. Gentleman is right that the way in which we look after people and injuries is a crucial part of the whole process. I hope that he will now accept that what is happening at Selly Oak, Headley Court and our regional rehabilitation centres is world class in terms of saving lives and allowing many people to be rehabilitated and, in some cases, to go back to service in greater numbers than they have before.
	The hon. Member for Newbury takes a great interest in this because of his regimental connections and the casualties that his regiment has suffered. I praise him for his work in taking service personnel to Newbury. I know that that was a very good day out and that they greatly enjoyed it. He put a lot of effort into it, and I wish to put that on the record.
	We need to judge the success of our procurement policy by the success of our military operations. We are clearly seeing success. Recently, when I was in Afghanistan, I found a great feeling that much has been achieved. There is much more to do, but people felt a great sense of achievement in doing something that was right and proper. That message came across from all ranks. There can be little doubt that our forces are demonstrating in Iraq and Afghanistan that they have behind them a robust and effective procurement infrastructure.
	We have changed the infrastructure in recent years, most notably through the formation of Defence Equipment and Support and the implementation of the defence industrial strategy. Two years on, it is clear that the DIS is working and has made an impact. It is embedded in our culture and the way we do business, and it is driving better partnerships between the MOD, as customer, and industry. Clarity and transparency are the cornerstones of the strategy, building strong foundations for an equipment programme that is stable and affordable and has the flexibility to respond to changing operational requirements.
	I want to echo an important point made by the hon. Member for Mid-Sussex: the fact that what our armed forces are doing in Iraq and Afghanistan is not getting wider recognition in the press and elsewhere. General Dannatt has also recently raised this issue, and we share those frustrations. Reporters are embedded in both theatres and, as the hon. Gentleman will know, there are opportunities to talk to our armed forces personnel. They could also go to Headley Court, where on two or three occasions I have spoken to them. There are plenty of opportunities to do more and plenty of information exists. A number of documentaries have been made and there have been TV involvements, but I agree that more should be done, and I urge those in the media to do more to publicise the fantastic bravery of our armed forces. My hon. Friends and I will continue to do as much as we can to ensure that the message about the bravery and professionalism of our armed forces gets across, but we cannot force people to print something or to show something.
	Two years on, it is clear that the defence industrial strategy is working and has made an impact. It is a blueprint for change and a plan of action. It is about robust project management, proper deadlines and driving forward through life capability, making sure our forces get the kit that they need when they need it. Of course, innovation is at the heart of this.
	In order to face the defence challenges of the future, we must maximise our benefits from advancing technologies. Last autumn, we launched our defence technology strategy, which outlines the research and development agenda over the next decade. The right hon. Member for Fylde raised a particular issue about the strategy's future and I hope that we will be able to deal with that. Innovation and a focus on emerging technologies will be a clear priority. That has provided the direction for both the MOD and industry about where we need to retain UK-owned capability to ensure operational sovereignty and national security.
	This nation has a strong science and technology base. UK scientists claim about 10 per cent. of the major international prizes every year. By 2014, the Government plan to increase investment in research and development to 2.5 per cent. of gross domestic product. Every year, the Department spends about £2.5 billion on research and development, and we are committed to pushing through our ideas into commercial spin-offs. We have steadily opened up our research programme to competition in recent years. We are well placed to reap the benefits of this process and the defence technology strategy sets the agenda on how we will go about that. Five major initiatives were launched through the DTS: the Grand Challenge; the Competition of Ideas; increased emphasis on science and technology research; engagement with industry on future investment in defence research and development; and investment in skills, about which my hon. Friend the Member for Glasgow, South-West made a point earlier. Those strands work together to ensure that the UK has the best people, skills, knowledge and industry it can.
	The Competition of Ideas proved to be extremely successful in reaching out to the wider scientific and engineering community to find solutions for the new challenges we face. I am delighted to have the opportunity to announce the very first award. The Competition of Ideas recently saw its first contract awarded to Plextec Ltd, which will research improvements in communications between vehicles and convoys. That is the kind of creative application from a small company—several issues have been raised today about the importance of small companies to defence—that has the potential to make a vital contribution to this country's defence effort. I commend my noble Friend Lord Drayson for his work in this area. It is widely accepted that he has done a magnificent job and made many major improvements.
	Many hon. Members referred to the importance of the defence industry to this country, and it is a vibrant and thriving sector. It supports more than 300,000 private sector jobs and produces revenue of around £13 billion per year. I pay tribute to it; it is crucial to this country and the defence effort. It is imperative that we get it right by ensuring the best deal for the front line and the taxpayer, and building capability throughout our armed forces is crucial to that.
	We talked about naval capability, but I would like to cover a few other areas. The capability of the Navy has improved demonstrably over the last decade. The Sea King Mk 6 anti-submarine warfare helicopter has been replaced by the new Merlin aircraft, which I saw recently during my visit to RNAS Culdrose. It is capable of significantly greater detection ranges and a faster cruising speed, and it is able to cover eight times more sea space, which represents a quantum leap in capability. Looking to the future, the maritime afloat reach and sustainability class of afloat support ships will replace the current group of ageing auxiliary fleet support helicopter ships. That will strengthen the Navy's ability to sustain an extraordinary expeditionary capability well into the 21st century.
	Much has been said today about capabilities, and as has been highlighted before, the responsiveness of our UOR programme. We have heard about the range of equipment now in theatre, and it is important to make the point that the UOR process has continued to deliver more than £1 billion of force protection—approved for Afghanistan and Iraq. It continues to deliver for our front line armed forces. To go further, as of August 2007, 91 per cent. of equipment procured under the UOR process was deemed either highly effective or effective by our troops, which is an improvement. The Viking, supplemented by UORs for a desert environment, has been praised by the Royal Marines operating in theatre. To quote one Marine:
	"Enemy mortars landed just two metres away from my Viking the other week and there wasn't even a scratch on her. Small arms fire rounds just bounce off her like stone chippings."
	Recently we have seen the deployment to Afghanistan of the guided multiple launch rocket system, or GMLRS, which has a precision strike ability of up to 70 kilometres. It has proved itself to be a remarkable asset to the Royal Artillery.
	Air capability also plays a crucial role in the success of our operations. We are in the final stages of gaining airborne stand-off radar, or ASTOR. It is a ground surveillance system designed to provide information regarding the deployment and movement of enemy forces. With contract costs of approximately £800 million, the ASTOR system comprises five aircraft and eight ground stations, together with comprehensive training and maintenance facilities at the main operating base, RAF Waddington. Clearly, the up-to-the-minute information this technology can deliver will be of exponential benefit to commanders on the ground.
	As I think was mentioned earlier, the procurement includes the future strategic tanker aircraft, which will replace the RAF's VC10s and TriStar fleets. The new platform will perform air-to-air refuelling and air transport roles. We are proceeding with a private finance initiative and aim to have the capability by 2011. We have already invested £25 million in this project—a figure that is likely to increase as we place orders.
	I shall briefly deal with several other points, especially those about helicopters. The hon. Member for North Devon spoke about the future of the Lynx helicopter. The project remains within its approved performance time and cost targets. The £1 billion cost that was announced in 2006 referred only to the contract with AgustaWestland for the development and manufacture of 70 aircraft. The overall approved cost is £2 billion, which includes significant elements outside the AgustaWestland contract, as well as VAT and the compound effect of inflation. We are committed to that.
	Helicopters, including the number that we need and the so-called shortfall, have been mentioned several times in the debate. We acknowledge that we need to do more. We have referred to the decision to purchase six Danish Merlins. We are currently converting eight Chinook mark 3 helicopters, the first of which will be available for operations in 2009. We are investing £4.5 billion in helicopters in the next 10 years, a considerable proportion of which will be used to enhance current fleets, such as the Puma and the Sea King, and to increase the flying hours for the Chinook and the attack helicopter in Afghanistan. We therefore expect further improvements in logistical support. We are making important improvements, not simply sitting around and accepting the situation. Making improvements is part of our overall strategy.

Liam Fox: I am grateful for the Minister's admission that the Government must do more. However, why, with two conflicts raging, did they cut the future rotorcraft capability budget in 2004, thereby removing £1.4 billion of funding for future helicopter improvement?

Derek Twigg: When I say that we must do more, we are clear about the need for that. We have always considered ways of improving matters for our front-line service personnel and we will continue to do that. We do not rest on our laurels and simply say, "Everything's okay today." We are always looking to improve our capability.
	The future rapid effect system—FRES—has been mentioned several times. We announced the acquisition strategy at the end of last year when we committed ourselves to holding utility vehicle trials this summer. They have taken place and it is planned to announce the result next month. Last week, we made an announcement about the system of systems integrator—SOSI—two months early. FRES is at the heart of procuring the Army's equipment, as the hon. Member for Reigate mentioned, and will underpin the development of the capable and highly deployable medium-weight force. FRES will deliver armoured vehicles with enhanced survivability and improved deployability, and grow potential for the future. We selected the vehicles that are participating in trials with the FRES utility design and, on 5 October, we announced the preferred bidder for the SOSI role. That is a clear sign of the Ministry's commitment to driving the FRES programme forward. The Ministry is also running a competition to select the company for the utility vehicle integration work.
	The right hon. Member for Fylde mentioned Typhoon.

Crispin Blunt: When will the Army get FRES? In 2003, we were told that the Army would get it in 2009; in 2007, we appear to be getting it in 2017. Things are going backwards, yet the Army relies on the vehicle coming into service.

Derek Twigg: The hon. Gentleman made that point in his speech. We are determined to press on and we will make an announcement at the appropriate time.
	I confirm that we have entered into discussions with our partner nations and the industry about tranche 3 of Typhoon. The purpose of the discussions is to obtain and exchange the information that we will need to make decisions in due course. They are at an early stage and will continue throughout 2007 and 2008. We will keep the House informed about that.
	My hon. Friend the Member for Grantham and Stamford made some good points.

Richard Benyon: I am grateful for the Under-Secretary's kind comments about me earlier. However, he has not tackled the points that my hon. Friends the Members for Mid-Sussex (Mr. Soames) and for Aldershot (Mr. Howarth) and I made about the Defence Export Services Organisation. We asked specific questions. Will he answer them and explain, if he has been told, why the decision was made?

Derek Twigg: Let me complete the point that I wanted to make. My hon. Friend the Member for Grantham and Stamford made some important points. The Conservative party expresses much criticism of what we do or do not do and the resources that we invest. There has been a massive increase in resources and improvements in equipment and support for our armed forces. Those improvements have occurred not only in equipment but in welfare and elsewhere. The key point is that Conservative Members will not say what they would reduce, where they would put extra money or where they would find it. They continue to say that they are not the Government. They have no credibility. As my hon. Friend said, when he asked such questions, they did not comment about where they would spend more money. That simply did not happen; they did not have such a debate. Their comments are therefore about making cheap political shots, not having a debate about increasing support for our armed forces.

Claire Ward: I beg to ask leave to withdraw the motion.
	 Motion, by leave, withdrawn.

PETITION

Tunstall (Road Calming)

Derek Wyatt: There is a rat run in my constituency, between the A249 Stockbury roundabout and Tunstall village, which is a lovely old Saxon village. Some years ago, I think that the Daleks ordered a softening of the road system, but not in the most difficult part of the village. The residents of Tunstall, the church and the school have a pretty tough time. What we want is a proper road-calming system for the village of Tunstall. The petition states:
	The Petition of the Residents of Tunstall
	Declares that the road between Tunstall Church and Tunstall School Car Park is dangerous.
	The Petitioners therefore request that the House of Commons urge the Secretary of State for Transport to reduce the speed limit to 20 mph, to provide a traffic control point at the narrowest point in the road and to ban lorries from using the road except for access.
	And the Petitioner remains, etc.
	 To lie upon the Table.

ANTI-DOPING IN SPORT

Motion made, and Question proposed, That this House do now adjourn. —[Claire Ward.]

Maria Miller: This is the second time that there has been a debate on the Floor of the House about the case of my constituent Mr. Paul Edwards. The previous debate was held in May 2002 by my predecessor, Mr. Andrew Hunter. In that debate, Mr. Hunter most precisely and eloquently put forward to the then Minister for Sport, the right hon. Member for Sheffield, Central (Mr. Caborn), the case of my constituent Mr. Edwards, who was banned from competing in athletics for the rest of his life as a result of a drugs test in June 1997.
	In that debate Mr. Hunter detailed deep concerns about the validity of the tests that had been undertaken. In his response, the then Minister came forward with some practical and helpful suggestions about procedures that my constituent could follow to have his case reviewed and try to ensure a satisfactory outcome. The fact that we are here again, some five years on from that debate, suggests that the course of action put forward by the then Minister has not brought the matter to a satisfactory conclusion. However, I hope that the Minister today will follow in his predecessor's footsteps, by responding positively to the debate and again offering some practical advice and support for my constituent, so that we can end almost a decade of uncertainty surrounding the case.
	I asked for this debate because in September 2005 new and critical information was obtained by my constituent under the Freedom of Information Act 2000. When examined by six independent toxicological experts, that information confirmed that there were clear grounds to call for a re-examination of the 1997 decision to ban Paul Edwards from competing in athletics. This newly disclosed evidence was never considered as part of the original disciplinary hearings, or of the appeal. I wrote to the then Minister asking him to outline the procedure that my constituent should follow in the United Kingdom to ensure that the new evidence could be assessed, so that a view could be taken based on the strength of the evidence as to whether the case could be reopened.
	In his letter of 9 May 2006, the then Minister said that I should write on my constituent's behalf to the International Association of Athletics Federations—the IAAF—to ask for an appeal. Indeed, the Minister indicated that he understood that the case was already under review. I followed his advice and duly wrote to the IAAF. Some time later—I have to say that it took about three months—I received a reply from Mr. Pierre Weiss, the general secretary of the IAAF, stating that there were no provisions under IAAF rules to allow for the reopening of Mr. Edwards' case, even though there was the potential for important new evidence to be presented.
	I was somewhat surprised by that response, given that the then Minister had clearly stated that the procedure for seeking such an appeal was to write directly to the IAAF. I therefore wrote to him again, but I did not receive an explanation of why the initial guidance from the Department appeared to be incorrect. This time, however, the right hon. Gentleman suggested that I contact the World Anti-Doping Agency—the organisation responsible for monitoring the appeals processes of international federations, including the IAAF—which I duly did. The reply that I received from the agency stated that issues such as this were simply not within its jurisdiction.
	So I contacted the then Minister's office for a third time, explaining that his new suggestion, too, had proved somewhat unfruitful. Again, I did not really get an explanation of why it had not worked, but it was suggested that I contact the Court of Arbitration for Sport to ask whether it might review the case. Dutifully, I did so, and in February this year—about a year and four months after my constituent had uncovered important, previously undisclosed evidence—I received a reply stating that the court was not in a position to review its own decisions, and that the only entity entitled to review the case and possibly reduce the sanction was, yes, the IAAF, the organisation that had stated that it had no provision in its rules to reopen cases that it viewed as closed, even when there was new evidence.
	After almost two years of correspondence—and, some might say, going round in circles—I have come to the House today simply to ask the Minister to clarify once and for all the UK procedures for dealing with cases such as my constituent's, in which compelling new evidence is available that might call into question previous decisions to ban sportsmen and women from taking part in competition.
	The Minister who is here today, in his role at the Department of Culture, Media and Sport, is responsible for ensuring that we have a workable anti-doping policy for the UK, and within that, the disciplinary procedures and appeals processes that are an important part of the process set out in the world anti-doping code and set out locally in the UK national anti-doping policy adopted in May 2005. Although the implementation and management of that policy is, rightly, delegated to UK Sport, the responsibility to ensure that UK athletes and other sportsmen and women have fair and transparent access to drugs monitoring, enforcement and disciplinary procedure rests with the Government.
	My constituent Mr. Edwards has had the freedom to compete in athletics taken away from him for the rest of his life. Competing in sport was the centre of his life, and receiving a lifetime ban has had a profound effect on both him and his family. The new evidence that he obtained in September 2005 has never been reviewed by a sporting body or considered by any tribunal, although it has been carefully scrutinised by six independent toxicology experts. All six agree that the information provides firm grounds to require the 1997 decision to ban Paul Edwards from competing in athletics for life to be reconsidered.
	It is not for me, or for this House, to judge the merits of that evidence, but it is the Government's responsibility to ensure that a fair, transparent and equitable appeals process is available to athletes such as Paul Edwards. I am therefore hoping that the Minister will outline the procedure that should be open to Mr. Edwards to ensure that this new evidence can be fully considered. Perhaps the Minister will tell us how best to proceed on this matter. What can the Minister take to our representatives on the International Association of Athletics Federations to help review the way in which these procedures affect UK athletes?
	The UK will be hosting the Olympic games in less than 60 months' time, so the Government have a duty to ensure that we have in place an open and workable procedure for dealing with drugs and doping in sport, including a transparent appeals process. It would appear that European bodies such as the IAAF, the World Anti-Doping Agency and the Court of Arbitration for Sport do not operate as the Minister's office and his Department think they do. If that is the case, can the Minister be really sure that the UK system is as fair to athletes like Paul Edwards as I am sure he wants it to be?

Gerry Sutcliffe: First, I congratulate the hon. Member for Basingstoke (Mrs. Miller) on securing the debate. I also congratulate her on her steadfastness in representing her constituent, Mr. Edwards, which she has done to a very great extent. I want to assure her from the start that I have looked into the case in great detail. As she said, there is a lot of correspondence and many issues have been raised previously. I shall discuss the Government's overall position on doping in sport. Tonight provides a great opportunity to consider it in detail. I will come to the particular case of Mr. Edwards at the end.
	Doping undermines the integrity of sport. To those watching sport and to the young people seeking to emulate them, athletes are seen as role models. It is very important to me that those people believe that their role models are competing in an event, race or game free from the spectre of drugs.
	The anti-doping movement is entering a particularly important time, with the coming months pivotal in the development of the future landscape of anti-doping internationally. November will see the culmination of the World Anti-Doping Agency's wholesale review of its world anti-doping code at the world conference on doping in sport. I look forward to representing the UK Government there in Madrid. That conference will draw to a close 18 months of intensive consultation during which WADA has—successfully, in my opinion—sought the views of Governments, anti-doping organisations, international federations covering all of the Olympic and Paralympic sports and the majority of professional sports from all around the world.
	That has been no mean feat. I know that a huge amount of work went on here in the UK to ensure that the views of this Government, UK Sport and our national governing bodies were listened to by WADA, and I am pleased to say that, on a number of issues, it has done that. I pay tribute to UK Sport's hard work in consulting all the governing bodies. We have come a long way in a short time, and the House should remember that WADA came into being only eight years ago in November 1999. The importance of this review cannot be underestimated.
	The first world anti-doping code was introduced back in 2004 and, at that time, it represented a watershed in the fight against those who would seek to cheat by doping. This review gives us the opportunity significantly to improve the code, based on the knowledge that sports' governing bodies and anti-doping organisations have developed after three years of practical implementation.
	Alongside the code, a number of other significant developments are worthy of mention. The first is the ratification and coming into force of the UNESCO convention against doping in sport. The genesis of the convention was the Copenhagen declaration, signed by Governments at the last world conference on doping in sport in 2003, signalling their support for the measures being taken to harmonise the approach to doping in sport through the code. The UK is signatory to the Copenhagen declaration and was one of the first countries formally to ratify the UNESCO convention in April 2006. This was a legally binding document, mandating Governments to take action to fight doping. The convention came into effect in record time, again showing the priority afforded to anti-doping by this Government and other Governments around the world. The United Kingdom is already compliant with the convention, but, as the hon. Lady said, our important role as host nation for the London 2012 games requires us to be sure that we are doing all we can to stop athletes from doping, and to be seen as a world leader.
	 It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
	 Motion made, and Question proposed, That this House do now adjourn.— [Claire Ward.]

Gerry Sutcliffe: I have met ministerial colleagues at the Home Office to discuss ways of strengthening our approach across government. I look forward to a further meeting on 7 November with a range of colleagues to seek ways of making further progress.
	Anti-doping has been the subject of two Select Committee inquiries—by the Culture, Media and Sport Committee in 2004 and by the Science and Technology Committee in 2006. The Government welcome the valuable contributions that those Committees have made to consideration of the UK's approach to doping in sport.
	Let me return to the subject of the code. That brings us to the athlete's right to a fair and transparent hearing, and the right of that athlete to appeal. Those rights are clearly embodied in the code and, to my mind, that is absolutely as it should be. The code and the supporting international standards provide a blueprint setting out the roles and responsibilities of the various agencies involved when an athlete is found to have committed a doping offence. It is within that framework that the United Kingdom's national anti-doping policy has been developed by UK Sport, supported by a set of model rules that stipulate the clear process under which athletes who are found to have taken a doping substance can expect their cases to progress.
	I am aware that in the case of the hon. Lady's constituent, Mr. Edwards, his doping violations occurred before those model rules were in place. However, I also understand that the processes to which he was subject in accordance with his right to a hearing and an appeal complied with the requirements set out in the model rules. In Mr. Edwards's case, the evidence was subject to an independent review and a disciplinary hearing was conducted by the then British Athletics Federation in 1998, followed by an appeal hearing by the BAF in 2000. Those processes were in line with the requirements.
	Mr. Edwards has seen three further reviews of his case—by UK Sport in 2002, 2004 and 2005, drawing on advice from those with scientific expertise in the area of anti-doping—and the International Amateur Athletics Federation considered his case in 2006. Moreover, as the hon. Lady said, the case was debated in the House back in 2002, in another Adjournment debate. I shall do my best not to repeat what was said then, as it is already on record.

Maria Miller: May I remind the Minister of the letter that I received from his colleague on 9 May 2006? Far from suggesting that the door had shut, it suggested that the case was still under review, and advised me on how to support my constituent. I understand what the Minister is saying, but it seems to be slightly at odds with what his colleague told me.

Gerry Sutcliffe: As I told the hon. Lady earlier, I have examined the case in great detail. I am trying to set out clearly what we believe to be the route that must be followed. She is right about the way in which some organisations have dealt with the issue, but I am talking about what happened in Mr. Edwards's case. It is a complex case, which has been the subject of a great deal of correspondence between the hon. Lady and her predecessor and my predecessor.
	The hon. Lady has referred to the scientific evidence and arguments behind the case. I am not a scientist—I do not know whether the hon. Lady is—and we have to rely on the experts who examine such cases day in, day out. My role as a Minister responsible for sport is to ensure that the correct structures, programmes and processes are in place to ensure that our athletes compete in a drug-free environment, and, when that is found not to be the case, to ensure that they have recourse to a fair appeal. Fundamental to any anti-doping programme are three key elements: robustness, consistency and fairness. In looking at Mr. Edwards's case, I am convinced that those three elements have been met. As the hon. Lady will have heard my predecessor say, it is not the role of the Minister for Sport to intervene in individual doping cases. When an athlete is found to be in violation of the anti-doping code, it is the responsibility of that athlete's national governing body and the international federation to decide what action to take, in line with the procedures set out in the world anti-doping code, and in the UK's national anti-doping policy. Again, I understand that the correct processes have been followed in this case. I have no remit to act outside of those, as has been set out in my previous correspondence. There is no mechanism by which we can become involved.
	In the last letter from my predecessor, dated 23 January 2007, the advice given was that the Court of Arbitration for Sport would be the final route of appeal for the hon. Lady's constituent. That advice was also given in the previous Adjournment debate in 2002. Therefore, I am a little surprised that Mr. Edwards has not taken the opportunity to go to that court.

Maria Miller: I thank the Minister for giving way; he is being very generous. He may recall from my earlier remarks that I wrote to the Court of Arbitration for Sport to ask whether it was able to review the case. It said that it was not within its jurisdiction to do that. In the letter that I received from his predecessor, the indication was that the process is to go to the International Association of Athletics Federations, but the IAAF does not agree with the Government that that is the process. Going back to the Minister's earlier remarks about there being procedures in place, it seems not to be a strong argument. I am not sure that he is right.

Gerry Sutcliffe: I am trying to go through the matter in great detail. I have asked for the details of the case to see what could be done and if anything needed to be done, but I have been assured that the processes that have been in place have given Mr. Edwards every opportunity under the existing codes and guidelines to put his case. I am advised that the Court of Arbitration for Sport is the final route. Clearly, the hon. Lady has had a different view from the court. If we need to pursue that, I give her the undertaking that that is what we will do to clarify the route. It is not for a Minister to act on behalf of an individual. I understand that it is not just a letter that needs to be sent; the details of the appeal have to be sent, too. We are saying that that is the final route that Mr. Edwards has to go through. I hope that that is helpful to the hon. Lady. If it is not, she and I will have to get together. I am happy to do that to sort out the final route, if that is appropriate.
	Fairness for all athletes must be the fundamental principle of any anti-doping system. From what I have been told, I am confident that Mr. Edwards has received fair treatment, notwithstanding the final appeal. The reviews that have taken place have been concluded to my satisfaction in terms of the detail that has been given to me. I believe that it is now time to move on to face future challenges. Clearly, with the route that I have outlined, that will be the final act, as it were, in terms of what we are able to do.
	I am grateful to the hon. Lady for raising the case. I hope that I have clarified to some extent some of the issues that she faces. I will work with her to clarify the final route of appeal.
	 Question put and agreed to.
	 Adjourned accordingly at eight minutes past Ten o'clock.